Oil and gas prices have risen sharply after fresh strikes hit energy infrastructure in the Middle East, including Qatar’s main gas facility.
Gas prices jumped by about 25% on wholesale markets in the UK and Europe in early trading, before easing slightly.
The price of gas in Europe is more than double the level seen before the US-Israeli war with Iran began.
Oil is also trading higher, with Brent crude jumping 10% to $119 a barrel on Thursday morning, before dropping to $112 shortly after midday.
UK gas prices are currently 165p per therm, a spike of 19%. They had hit nearly 183p earlier in the day.
Meanwhile, natural gas prices in Europe have hit a three-year high.
The jump comes after Iran’s South Pars gas facility – one of the world’s largest natural gas fields – was hit on Wednesday evening.
Iran retaliated by targeting a major liquefied natural gas export facility in Qatar, causing “extensive damage”, raising concerns over the global energy supply.
The strikes on Ras Laffan follow reports that Israel hit Iran’s petrochemical complex on the South Pars gas field.
The latest news rattled stock markets, as investors become increasingly concerned of the potential economic impact of a prolonged conflict.
In Japan, the Nikkei share index closed down 3.4%, and in London the FTSE 100 was down 2.5% in early afternoon. The three main indexes in the US also opened lower.
Matthieu Favas, commodities editor at The Economist, told the BBC’s Today programme that the rise in gas prices was “huge”.
“This is on account of the attack of the gas facility in Qatar, which was offline, but the hope would be that it would be restarted within weeks, but the attack now – several missiles aimed at this facility, one of them hitting directly – makes it clear that this is unlikely to happen.
“This could last months and these facilities provide a fifth of the global supply of liquid natural gas, which is why the market is reacting the way it is now, it’s pricing in long-lasting disruption.”
However, he said prices were still a long way off the peaks seen in the aftermath of Russia’s invasion of Ukraine.
Iran’s military had warned it would take “decisive action” in response to the strike on its energy infrastructure.
“As previously warned, if the fuel, energy, gas, and economic infrastructures of our country are attacked by the American-Zionist enemy, in addition to a powerful counterattack against the enemy, we will severely strike the origin of that aggression as well,” the military said in a statement published by Tasnim, a news agency affiliated with the Islamic Revolutionary Guard Corps.
“We consider targeting the fuel, energy, and gas infrastructures of the countries of origin legitimate and will retaliate strongly at the earliest opportunity.”
Qatar also operates facilities on the gas field, which it calls North Dome.
But the country, which produces a fifth of the world’s liquefied natural gas, had halted production earlier in March in response to the conflict.
Ras Laffan was among the sites listed by Iran as a possible target following the attack on the South Pars gas field.
Just after 19:00 GMT on Wednesday, Qatar’s interior ministry said that it had “initially brought the fire in Ras Laffan under control, with no injuries reported”.
Nick Butler, former head of strategy at BP, told the BBC’s Today programme that the strike on Ras Laffan “will almost certainly cut off a level of supply of LNG to the world market”.
“I think the worry now is that the market is expecting things to get worse. That in their view, Mr Trump has opened a Pandora’s box, and he’s lost control of what is happening day-to-day in the region.”
He said the gas in Ras Laffan “can’t be substituted very quickly at all, and maybe not for a very long time”, which will push up prices.
US Treasury Secretary Scott Bessent said on Thursday that the US was considering suspending sanctions on Iranian oil as it looks for ways to keep oil prices in check.
The move would affect about 140 million barrels oil that is already on the water, he told Maria Bartiromo on Fox Business.
It adds to other US efforts to boost oil supplies, including the suspension of sanctions on Russian oil and moving to relax shipping rules to ease shipments of oil and other commodities between US ports.
The world consumes about 100 million barrels per day of oil.
Earlier efforts by world leaders to ease price pressures, including an unprecedented release of oil reserves, have done little to reduce oil prices.
Meanwhile, Iran has also suspended the flow of gas to Iraq to shore up domestic supplies, a senior Iraqi official told Reuters.
The vast majority of Iran’s gas supply – 94% – is used domestically, according to data from the Gas Exporting Countries Forum.
