Global oil and gas prices soar as Iran crisis disrupts shipping, production

The benchmark Brent crude oil contract settled up $3.66, ‌or up 4.7%, at $81.40 a barrel on Tuesday, its highest settlement since January 2025. European gas prices soared as much as 40% before paring gains, adding to a 40% surge on Monday. Sugar, fertilizer and soy prices have all risen too.

The conflict risks triggering a spike in inflation that could choke off economic recovery in Europe and Asia if the war is prolonged in a region that accounts for just under a third of global oil production and almost a fifth of natural gas.

U.S. President Donald Trump said the U.S. Navy could begin escorting oil tankers through the Strait of Hormuz, a crucial oil shipping lane, if necessary, adding he had ordered the U.S. International Development Finance Corporation to provide political risk insurance and financial guarantees for ⁠maritime trade in the Gulf.

It was one of the administration’s most aggressive steps to try to contain soaring energy prices as conflict escalates in the Middle East.

Tankers are seen off the coast of the Fujairah, as Iran vows to close the Strait of Hormuz, amid the U.S.-Israel conflict with Iran, in Fujairah, United Arab Emirates, March 3, 2026. Photo by Reuters

Iraq, OPEC's second-largest producer, said it may be forced to cut production in a few days by more than 3 million barrels per day if oil tankers cannot move freely to loading points, according to two Iraqi oil officials.

As of Tuesday, Iraq has decreased production from the Rumaila oil field by 700,000 bpd and cut 460,000 bpd from the West Qurna 2 field, the officials said.

Shipping at a standstill, oil and gas output slashed

Traffic through the Strait of Hormuz was effectively closed for a fourth day after Iran attacked five ships, choking off the artery accounting for about 20% of global oil and LNG supply.

Crude tanker transits through the strait fell to four vessels on March 1, the day after hostilities broke out, versus an average of 24 per day since January, according to Vortexa vessel-tracking data. Three of the four were Iran-flagged.

Hundreds of tankers loaded with oil and LNG are stranded near big hubs, such as the United Arab Emirates' port of Fujairah, unable to reach customers in Asia, Europe and elsewhere.

Some companies are seeking alternative routes.

Saudi oil giant Aramco is attempting to reroute some crude to its western Red ‌Sea port of ⁠Yanbu, but sources, including buyers, traders and analysts, said Aramco's east-west pipeline had limited capacity and could become a target of attacks by Iran's allies.

On Tuesday, a fuel tank at Oman’s Duqm commercial port was hit by a drone and a fire broke out at the UAE's Fujairah, one of the key regional oil hubs, slowing ship refueling and potentially shifting demand to other ports including Singapore.

On Monday, Qatar shut its liquefied natural gas facilities, some of the world's biggest, which supply around 20% of global LNG exports. Saudi Arabia suspended production at its largest domestic refinery, while Israel and Iraq's Kurdistan also shut chunks of their gas and oil output.

Elsewhere, Chinese refiners have started to shut units in response to the conflict's impact on ⁠crude supply. India, one of the most dependent countries on oil and gas from the Middle East, has said it has started to ration gas supplies to industries after Qatar production was shut down.

In the U.S., where gasoline prices are a key political pressure point, the cost jumped above $3 per gallon for the first time since November, just weeks after Trump touted his achievements in bringing prices down to $2.

Most Qatari LNG flows to Asia, but some also flows to Europe, which depends entirely on imported oil and gas. Europe is expected to scramble to replenish stocks, depleted by a cold winter, and will need to rely more on U.S. gas as it shuns Russian gas.

Shipping rates have jumped to an all-time high as the conflict has intensified and Tehran ⁠has targeted ships passing through the strait.