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BANGKOK (AP) — On Thursday, global markets reacted sharply as oil and natural gas prices surged in response to Iran’s assault on a significant natural gas facility in Qatar. This site is crucial as it contributes about 20% to the global gas supply. Additionally, the attack targeted two oil refineries in Kuwait, further escalating tensions.
The incidents have intensified concerns regarding the energy crisis initiated by the closure of the Strait of Hormuz to tanker movements, suggesting that the impact on oil and gas production might be more severe and prolonged than initially anticipated.
In the wake of these developments, Brent crude, the global oil price benchmark, soared to nearly $114 per barrel, a significant rise from its pre-war level of just under $73 per barrel.
Similarly, the European TTF index, which serves as a benchmark for natural gas prices, saw a 24% increase on Thursday.
The Iranian offensive struck the Ras Laffan terminal in Qatar, a pivotal hub for exporting liquefied natural gas (LNG). This terminal, which usually accounts for about a fifth of the world’s LNG supply, halted operations following a drone strike. With the closure of the Strait of Hormuz restricting most tanker traffic, the LNG now has no viable export route.
World shares retreated after stocks on Wall Street slumped as oil prices resumed their climb.
U.S. stocks also sagged due to a report that said inflation was primed to worsen even before the war with Iran sent oil and gas prices spiking. That, and comments from the head of the Federal Reserve, led investors to expect there’s less chance of getting the lower interest rates that they crave.
U.S. futures were little changed, while Treasury yields pushed higher, lending still more strength to the U.S. dollar, which has gained against other major currencies since the war began.
Oil prices have soared because the war has disrupted the Persian Gulf’s energy industry.
Iran is intensifying its attacks on its Gulf Arab neighbors’ energy infrastructure as it hits back following an Israeli attack on its main natural gas field.
If the disruptions keep oil and gas prices high for long, they could create a debilitating wave of inflation for the global economy.
U.S. benchmark crude oil gained 1.1% to $96.45 a barrel early Thursday, while the Henry Hub future contract, the benchmark for U.S. natural gas, gained 3.3%.
In Asian share trading, Tokyo’s Nikkei 225 fell 3.4% to 53,372.53 as the Bank of Japan opted to keep its benchmark interest rate on hold at 0.75%, citing the war with Iran as one factor.
In its monetary policy statement the BOJ said that “in the wake of increased tension in the Middle East, global financial and capital markets have been volatile and crude oil prices have risen significantly; future developments warrant attention.”
Higher oil prices are a heavy burden for Japan, which like South Korea and Taiwan depends on imports of most raw materials for industries that rely heavily on oil and its derivatives.
The Kospi in Seoul lost 2.7% to 5,763.22.
In Hong Kong, the Hang Seng slipped 2% to 25,507.89, while the Shanghai Composite index shed 1.6% to 3,996.44.
Australia’s S&P/ASX 200 lost 1.7% to 8,497.80 and Taiwan’s Taiex fell 1.9%. In India, which has also suffered from shocks to supplies of oil and gas, the Sensex lost 2.3%.
“The combination of higher oil, rising U.S. yields, and a stronger dollar is acting as a macro wrecking ball across Asian assets and currencies,” Stephen Innes of SPI Asset Management said in a commentary.
On Wednesday, the S&P 500 fell 1.4% to 6,624.70, flipping to a loss for the week so far. The Dow Jones Industrial Average dropped 1.6% to 46,225.15, and the Nasdaq composite slid 1.5% to 22,152.42.
The losses deepened after the Fed decided to keep its main interest rate steady, instead of resuming cuts meant to give the job market and economy a boost.
“We just don’t know,” Fed chair Jerome Powell said about what will happen with oil prices, along with how long President Donald Trump’s tariffs will take to work their way fully through the system.
A report released Wednesday morning showed inflation pressures were already building before the war began. It said inflation at the U.S. wholesale level unexpectedly accelerated last month to 3.4%.
In other dealings early Thursday, The U.S. dollar fell to 159.71 Japanese yen from 159.88 yen. The euro rose to $1.1467 from $1.1453.