Energy prices rose sharply as disruptions to tanker traffic through the Strait of Hormuz and damage to production facilities raised uncertainty about how US and Israeli attacks on Iran would affect supply to the world economy.
The biggest shock was to natural gas prices, which rose more than 40 per cent in Europe when QatarEnergy, a major supplier, halted production of liquefied natural gas after its facilities were reportedly hit by an Iranian drone attack. The state-owned firm blamed the war for the decision.
Qatar is a major gas supplier for Europe, which relies on shipments of liquefied gas, or LNG, to replace supplies of Russian pipeline gas lost due to the invasion of Ukraine.
Iran has declared the Strait of Hormuz closed.AFP
“Infrastructure is at risk throughout the region, and it’s not just at risk because of deliberate attacks, but also inadvertent attacks,” said Kevin Book, managing director at Clearview Energy Partners.
“Shrapnel and debris from missile interceptions can fall onto facilities and disable them too, and so there are a number of challenges that come from this kind of conflict in an area with so much energy production.”
Oil prices extended their gains, adding more than 1 per cent today after surging around 6 per cent on Monday (Australian time).
AP