Iran turns off the taps: Gas and oil prices soar as drone attacks shut down Qatari production and Saudi Arabia’s biggest oil refinery

Gas and oil prices rose on Monday as Iran’s attacks in the Middle East reduced supplies and threatened painful financial hardship on UK households and motorists.

Across the dam, Qatar stopped liquefied natural gas (LNG) production, while Saudi Arabia closed its largest oil refinery.

Additionally, tanker traffic in the Strait of Hormuz, through which 20 percent of global oil supply passes, was disrupted due to numerous attacks on ships.

Among them was the fuel tanker Athena Nova, which burned after being hit by two drones by Iran’s Revolutionary Guard on Monday night.

The chaos caused natural gas prices to rise by up to 45 percent in Europe. Analysts said a prolonged crisis could lead to a rise in bills of up to £2,500, reminiscent of the crisis in 2022 caused by Russia’s invasion of Ukraine.

Oil prices increased by more than 13 percent, reaching as high as $82.37 per barrel. This is the highest level in more than a year.

Experts have warned that this figure could rise above $100 if the conflict continues, with painful consequences for drivers and the wider economy.

This has led to calls from automotive and industry groups for Chancellor Rachel Reeves to abandon planned fuel duty increases.

Meanwhile, there is a possibility that the crisis will increase inflation caused investors to reduce bets on the Bank of England to cut interest rates It was a blow to millions of debtors at the end of this month.

Global stock markets were shaken by the crisis in London FTSE100 It fell 1.2 percent, or 130 points, amid big declines in airline stocks and banks; However, companies such as BP and Shell gained profits thanks to the increase in oil prices.

The crisis has also raised questions about Labour’s race to reach net zero, with the Conservative Party saying Energy Secretary Ed Miliband’s ban on new oil and gas licenses in the North Sea has made Britain increasingly dependent on imports from Qatar.

Conservative Party energy spokesperson Claire Coutinho said: ‘We are the only country that has shut down its domestic energy supply. ‘The world is becoming increasingly unsafe, we must change course.’

Qatar produces one-fifth of the global supply of LNG, gas cooled into liquid form for transport by sea.

The increase in gas prices in Europe on Monday pushed prices up to $46.50 per thermal unit (unit of energy). This is dwarfed by the crisis, which climbs to $309 in 2022.

A sustained rise in gas prices could mean a sharp increase in the UK’s energy price cap from July, possibly eliminating the recently announced £117 cut on annual bills that will apply from April.

Stifel analyst Chris Wheaton said: ‘We are more interested in European gas prices than oil prices. If LNG production from Qatar/UAE is disrupted, we will see a repeat of 2022.’

Mr Wheaton said a three-fold increase in wholesale gas prices could translate into a typical bill of £2,500 a year, up from the £1,641 level that comes into force next month.

Meanwhile, the suspension of operations at Saudi Arabia’s Ras Tanura oil refinery, which produces 550,000 barrels per day, increased the pressure on oil prices. This followed a drone attack on the area.

Torbjorn Soltvedt, Middle East analyst at risk intelligence firm Verisk Maplecroft, said this “marks a significant escalation and the Gulf energy infrastructure is now directly in Iran’s crosshairs.”

Maurizio Carulli, global energy analyst at asset manager Quilter Cheviot, said oil prices could possibly fall to $60 if the conflict in the Middle East calms down.

But he added: ‘If the situation escalates into a large-scale and protracted Middle East war, with shipping in the Strait of Hormuz halted, then the oil price is likely to rise to $100 or more.’

Although the strait has never been effectively closed, he said, recent conflicts have pushed shipping companies to drop anchor due to the risk of damage or seizure and the lack of insurance coverage.

“Satellite data shows that oil tanker transit almost stopped over the weekend,” Mr. Carulli added.

Simon Williams, head of policy at motoring body RAC, outlined the impact a sustained rise in petrol prices could have on the cost of filling up a car, compared to the current level of under 133p.

‘If oil climbs to the $80 per barrel mark and stays there then drivers can expect to pay an average of 136p for petrol. “At $90 we’re looking at more than 140p per litre, and $100 gets us closer to 150p, but it’s too early to know,” he said.

An increase of 150p would add just over £9 to the cost of fueling a 55-litre car.

Rises in oil and gas prices threaten to increase inflation in the UK; This is a headache for Chancellor Rachel Reeves, who is preparing to respond to the latest independent economic forecasts in her spring statement today.

Ms Reeves announced last autumn that tax cuts on fuel would begin to be reversed from September but faced pressure to reverse the policy on Monday.

Fair Fuel UK’s Howard Cox said: ‘In light of the ongoing crisis in the Middle East, Rachel Reeves should declare in her Spring Statement that Fuel Duty will be frozen for the duration of Parliament and cancel all planned increases.’