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Fast reading
- Attacks on energy infrastructure across the Middle East have caused extensive damage to the world’s largest gas plant in Qatar, as well as sites in the UAE.
- Brent crude – a proxy for global oil prices – climbed nearly 7% to US$114 a barrel on Thursday.
- The cost of other commodities has begun to rise, such as helium (a byproduct of LNG processing), agricultural fertilisers, plastics feedstocks and aluminium.
Oil and gas prices continued to climb this week following tit-for-tat strikes against Gulf energy infrastructure as the conflict in Iran showed no signs of easing up.
On Wednesday, Iran struck Qatar’s Ras Laffan gas plant, the world’s largest, causing extensive damage. The attack followed an Israeli strike against Iran’s South Pars gas field and the closure of the UAE’s Habshan gas facility and Bab oil field following retaliatory Iranian strikes.
In response, Brent crude – a proxy for global oil prices – climbed nearly 7% to US$114 a barrel on Thursday (19 March)1, while European wholesale gas prices surged 35%2 at market’s open, to their highest level since the start of the conflict.
Investor fears about a prolonged conflict have driven equity markets marginally lower, with Europe’s Stoxx 600 Index falling close to 2% on the week by Thursday afternoon. The Nikkei 225 fell close to 1% over the same period, while the S&P 500 dropped close to 2%. Government yields on US, German and UK debt all climbed3.
If the conflict lasts a couple of weeks that’s probably tolerable; if the Strait remains closed for months then it becomes much more problematic for global stock markets
Mark Sherlock, Head of US and Sustainable Equities, says that higher oil prices will have a ripple effect across the global economy.
“The costs will feed through into any number of goods, most obviously petrol at the pump but also into the price associated with anything that needs transporting,” he says. “This then puts pressure on inflation, which then puts pressure on interest rates, which – all other things being equal – will act as a contractionary force for the global economy.”
With this in mind, the key question for investors now is how long the conflict might go on, says Sherlock. “There aren’t really that many credible options to get oil out of that part of the world other than through the Strait of Hormuz,” he says. “If the conflict lasts a couple of weeks that’s probably tolerable; if the Strait remains closed for months then it becomes much more problematic for global stock markets and the equities we invest in on behalf of our clients.”
Putting the Iran Conflict into perspective
The commodities cost
Damian McIntyre, Head of the Multi-Asset Solutions Team, highlights a similar theme, noting how the ‘second-order’ effects of the higher oil price and the closure of the Strait of Hormuz are now becoming apparent as the cost of other commodities begins to rise.
As just one example, McIntyre notes how Qatar accounts for about 30% of the world’s helium output as a byproduct of liquified natural gas (LNG) processing.
“But it’s other areas too,” says McIntyre. “The price of urea – a crucial component of agricultural fertilisers – has surged. So has the price of plastics feedstocks in the form of Polypropylene (PP) and polyethylene (PE). All three are derivatives of oil and natural gas production and processing so it’s not surprising they’ve been affected.”
But even other areas – aluminium for instance – have been hit, according to McIntyre. “Again, this shouldn’t be a surprise,” he says. “Gulf producers account for about 9% of global aluminium output so, of course, the closure of the Strait of Hormuz will make a difference.”
The fixed income view
Mitch Reznick, Group Head of Fixed Income – London, notes that Thursday’s (19 March) unanimous decision by the Bank of England to hold interest rates at 3.75% shows just how quickly inflation expectations have shifted since the start of the Iran conflict.
“The Monetary Policy Committee’s (MPC) use of past tense in today’s release when referring to ‘disinflation’ formalised the pivot toward ‘reflation’, which explains its strong language of vigilance,” he says.
“The material sell‑off in sterling rates over the last three weeks shows that the market had anticipated this to some degree; however, the tone of the release pushed rates even wider. By way of example, at the start of the month the market was pricing a 90% chance of a rate cut. That had fallen to zero a few days ago, and now the market shows a 65% probability that the MPC will vote to increase rates in April, and again in June.”
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Previous Market Snapshot
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Oil prices have whipsawed this week as the Middle Eastern conflict threatens to choke global supply, with potentially big knock-on impacts for the global economy.
3 March 2026 – Escalating Iran war rocks markets
Stocks and bonds sell-off and energy prices surge as wider Gulf region drawn into conflict.
27 February 2026 – Nvidia: the canary that didn’t sing?
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