The latest attacks on energy infrastructure across the Middle East have caused energy prices to skyrocket, with the cost of Brent crude oil hitting highs of over $100 and UK gas jumping up 25 per cent, to over 170p per therm.
Iran has launched more missile strikes on Qatar’s LNG sites, the UAE’s oil depots in the port of Fujairah, as well as oil and gas tankers in the Strait of Hormuz. They have also made threats to attack Saudi Arabia’s energy facilities.
This escalation has been prompted after Israel’s incursions into Lebanon and the IDF’s killing of Iranian Security Chief, Ali Larijani.
The US and Israel have conducted attacks on key Iranian energy facilities, including Kharg Island and the South Pars gas field – the central hubs for Iran’s oil and LNG industries respectively.
US President Donald Trump has also threatened to “blow up” the entirety of the South Pars gas field if attacks on Qatar continue.
UK and European Markets
For the UK market, the war has led to sharp drops in the FSTE 100, with the rise in energy prices signalling increases to operational costs for businesses, potential airline fare hikes and an exacerbation to the Cost-of-Living Crisis.
Citing the conflict, the Bank of England has just announced Interest Rates will be held at 3.75 per cent. This was tempered by their warning that inflation rates look set to rise.
Energy prices are now at their highest since December 2022 during the peak of the Russia-Ukraine war. Critics are stating how the Iran War has once again highlighted weaknesses in the UK and Europe’s energy security.
While Norway has now become Europe’s largest gas supplier, the UK and the rest of Europe are scrambling to try and mitigate the damage done by the crisis.
Renewed pressure is on the Labour government to reopen the North Sea oil fields after Energy Secretary Ed Miliband repeated refusals due to his Net Zero Targets. It is hoped that doing so may offset energy costs for households.
But it is uncertain whether this may be effective as hoped if the war continues to escalate and the market continues in its volatility.
