The sequence of events that led to one of the most turbulent trading days in recent memory began over the weekend, when US and Israeli military strikes dramatically escalated the ongoing conflict with Iran. By the time financial markets opened on Monday morning, the full scale of the disruption to energy supply chains was becoming apparent — and traders and investors reacted with alarm.
The weekend’s military strikes prompted Iran to reportedly warn tankers in the Strait of Hormuz that no vessels would be allowed to pass through. Two ships were attacked in the strait — one near Oman and another near the United Arab Emirates. Marine tracking systems began registering a build-up of tankers on both sides of the waterway, unable or unwilling to attempt the passage. The effective closure of one of the world’s most critical energy shipping lanes was underway.
In Qatar, drone attacks on the major Ras Laffan energy facility prompted QatarEnergy to suspend LNG production. Qatar’s defence ministry confirmed the drone attack and reported no human casualties. The state energy company issued a statement noting it would continue to communicate updates to its stakeholders. The shutdown of the world’s biggest LNG export facility sent immediate shockwaves through gas markets.
When European gas markets opened on Monday, the price response was dramatic. The Dutch day-ahead contract surged 41% to €45 per megawatt hour. UK gas prices rose 40% to 110p a therm. Oil markets moved sharply higher, with Brent crude gaining as much as 13%. Stock markets in Europe opened sharply lower, with declines accelerating as the full scale of the disruption became clear.
By midday, the picture had clarified further. Maersk announced the suspension of transits through both the Strait of Hormuz and the Suez Canal. The International Maritime Organization issued safety warnings. Defence stocks were surging while airlines and energy-intensive industries were falling sharply. Gold was rising. Analysts were warning that oil could exceed $100 a barrel. In a matter of hours, the global energy and financial landscape had been transformed.