A tanker anchored in the Persian Gulf off coast of Dubai, one of scores halted on either side of Strait of Hormuz after it was effectively closed due to threats against shipping made by the regime in Tehran that have sent global energy prices soaring. Photo by Stringer/EPA
March 3 (UPI) — The price of Brent crude oil rose to $80 a barrel and the price of natural gas jumped 30% to $1.97 per therm on Tuesday after Iran effectively shut the key Strait of Hormuz shipping lane, with an official threatening its forces would “set fire to anyone who tries to pass.”
Prices continued their upward trajectory from Monday when markets reopened following the military strikes over the weekend on Iran by the United States and Israel and Tehran’s strikes on its oil and gas producing neighbors across the Gulf.
Concerns over supply disruptions are growing as the conflict widens across the region with Iranian strikes going beyond military bases used to launch attacks on Iran to target oil and gas production facilities, as well as Amazon data centers in the United Arab Emirates and Bahrain.
On Monday, Qatar Energy, one of the world’s largest exporters of liquefied natural gas, shut down production following “military attacks” on its Ras Laffan plant and Saudi Arabia’s state-run Aramco shuttered its giant Ras Tanura refinery near the port city of Dammam after it was set ablaze in a drone strike.
Analysts warned the oil price could surpass $100 a barrel if the disruption continued for very long — translating to a 25-cent-a-gallon rise in U.S. petrol prices.
The risk to maritime traffic was also pushing up the cost of moving oil from the Gulf to Europe and Asia and around the world with the leasing cost of a tanker to ship Middle East to China doubling to $400,000 a day on Monday.
The president of logistics technology platform Flexport, Sanne Manders, told the BBC that while Iran had not physically blockaded the strait, through which 20% of the world’s oil and gas transits, it was closed as far as global shipping was concerned.
Manders said it was partly that shipping lines were simply unwilling to expose their vessels, cargo and crews to potential jeopardy and partly insurance companies “not being willing to insure this risk anymore.”
He warned that expectation of higher fuel costs would feed through to movement of all goods by sea with carriers hiking rates “for any shipping in the world.”
That all fed into investor fears over the consequences for inflation and interest rates, sending global stock markets tumbling overnight, led by Japan’s Nikkei 225 Index, which ended Tuesday down more than 3%.
In mid-morning trade London’s FTSE 100 was down 2.8 %, Germany’s blue-chip DAX was trading 4% lower, down more than a thousand points, and the CAC 40 in Paris was off by 3.2%.
The pan-European Stoxx 600 Index continued its retreat, with across-the-board falls in all sectors pulling it 2.9% lower, while the blue-chip Euro Stoxx 50 was even lower, down 3.1%.
However, hotels, airlines and utilities took the biggest hits while energy firms and defense contractors performed better.
Ahead of the opening of U.S. markets, S&P 500 futures fell by 1.8%, Nasdaq 100 futures were down 2.3% and Dow Jones Industrial Average-linked futures moved lower by around 1.7%, or 821 points.
Defense and energy stocks rose on Monday led by Northrop Grumman, up 6%, and Palantir, up 5.8%, which together with a surge in NVIDIA’s share price, helped the overall market erase big losses early on to end the day in the black.
U.S. President Donald Trump was due to discuss the economic and cost-of-living impacts with Treasury Secretary Scott Bessent and Energy Secretary Chris Wright on Tuesday while Secretary of State Marco Rubio trailed administration plans to cope with energy price spikes.
“We knew that going in would be a factor. Starting tomorrow you will see us rolling out those phases to try to mitigate against that,” said Rubio.
