Global energy markets are on maximum alert following the military escalation in the Middle East. The outbreak of direct confrontation between the United States and Israel on one side and Iran on the other has effectively paralyzed shipping through the Strait of Hormuz - the vital artery that carries more than 20 percent of the world’s oil and gas supplies - fueling fears of a major supply shock.
How quickly oil tanker traffic resumes normal operations through the strait is now critical. Roughly one-fifth of global oil production and a similar share of liquefied natural gas transit the narrow waterway.
Estimates from JPMorgan suggest that a 25-day halt in tanker traffic would fill storage tanks in producing countries to capacity, forcing them to cut output.
On Monday, in the first trading session since Saturday’s attack, oil prices surged sharply. Brent crude, the international benchmark, jumped as much as 13 percent to trade above $82 a barrel, its highest level since January 2025.
At the same time, insurers announced the cancellation of some policies covering vessels operating in the region. Meanwhile, S&P Global Platts, a leading provider of oil price assessments, suspended bids and offers for Middle Eastern refined product benchmarks that pass through the Strait of Hormuz, citing shipping disruptions linked to the US-Iran conflict. The agency added that it is reviewing its pricing methodology for Middle Eastern crude.
Gas Crisis Deepens
The turmoil has not been limited to oil. Natural gas markets have also been jolted, with European prices jumping more than 30 percent after QatarEnergy announced a suspension of production and exports.
Qatar’s Ministry of Defense said an Iranian drone targeted an onshore gas processing facility in Ras Laffan Industrial City, forcing operations to halt.
The impact is particularly severe for Europe, which relies on Qatar as a strategic alternative to Russian gas. Ole Hvalbye, a commodities analyst at SEB, said disruption to flows through Hormuz, which account for about 20 percent of global LNG supplies, would spark fierce competition between Asian and European buyers for US cargoes, driving prices sharply higher across the Atlantic basin.
The direction of prices now depends largely on how long the conflict persists. Analysts say the base-case scenario hinges on political developments in Tehran, where the international community hopes for either a significant leadership shift or US diplomatic intervention to de-escalate tensions within one to two weeks.
However, if prices remain elevated for a prolonged period, the risk of a renewed global inflation surge looms, placing central banks in a historic bind between curbing inflation and supporting economic growth.
Asia at the Epicenter
Asia - widely regarded as the engine of global growth - now finds itself at the heart of the crisis. The region is the most exposed to the fallout from the Middle East conflict due to its heavy dependence on Gulf oil and gas supplies. This is not merely a trade disruption; it is a direct challenge to energy security across Asian capitals.
Countries such as Japan, South Korea and India rely heavily on Middle Eastern shipping lanes to secure their energy needs. In Japan, around 70 percent of imported oil passes through the Strait of Hormuz, leaving the country highly vulnerable to geopolitical tensions in the corridor. China, despite diversifying its suppliers, remains the largest buyer of Iranian crude and Qatari LNG, making the security of these flows critical to its industrial economy.
Asian governments are now scrambling to reassess their strategic reserves.
If the conflict turns into a prolonged war of attrition, countries such as Japan and South Korea could face an unenviable choice: draw down reserves that may prove difficult to replenish quickly, or accept soaring spot market prices.
With Qatari LNG supplies disrupted, Asia has already entered into intense competition with Europe for US and Australian cargoes. The scramble for alternative supplies is tightening global availability and sharply increasing energy costs across emerging Asian economies.
For India and several Southeast Asian nations, higher prices mean an immediate rise in import bills, placing heavy pressure on balance-of-payments positions and fueling imported inflation that could undermine growth targets for the year.
The strain extends beyond crude oil. Asia’s refineries - the largest in the world - depend heavily on medium and heavy Middle Eastern grades. A sustained disruption in these supplies could force refiners to cut processing rates, leading to shortages of diesel, gasoline and jet fuel within the region itself, with knock-on effects for transportation and logistics.
