Oil prices surged sharply on Monday as disruptions to tanker traffic through the Strait of Hormuz heightened concerns over global energy supply amid US and Israeli attacks on Iran. US crude jumped 7.6 per cent to $72.12 per barrel, while Brent crude rose 8.6 per cent to $79.11 per barrel. European natural gas futures also spiked more than 40 per cent after Qatar, a major supplier, halted liquefied natural gas (LNG) production in response to the conflict.The disruptions have raised the prospect of higher gasoline prices for US drivers, as well as rising costs for other goods globally, at a time when many consumers are already feeling the effects of inflation.A key focus for markets is the Strait of Hormuz, at the southern end of the Persian Gulf, through which around 20 per cent of the world’s oil supply passes. Tanker traffic in the area dropped sharply amid reports of disrupted satellite navigation systems. The UK Maritime Trade Operations Centre reported attacks on multiple vessels on either side of the strait and warned of increased electronic interference affecting tracking systems.In the Gulf of Oman, a bomb-carrying drone struck a Marshall Islands-flagged oil tanker, killing one mariner, according to Omani authorities. Iran has issued threats against vessels approaching the strait and is believed to have carried out multiple attacks in the region.Saudi authorities also reported intercepting Iranian drones targeting the Ras Tanura oil refinery near Dammam, leading to a temporary shutdown of some units as a precaution, according to Saudi state media. Analysts are closely watching whether the conflict could spread to other major oil-producing countries in the Gulf.For most Middle Eastern oil exporters, the Strait of Hormuz is a critical route. While pipelines exist to bypass the strait, their capacity is limited and cannot handle the bulk of oil shipments from Saudi Arabia, Iraq and the UAE. Meanwhile, QatarEnergy announced that it had stopped LNG production, citing the ongoing US-Israeli military operations in Iran. Europe relies heavily on Qatari LNG to offset reduced Russian pipeline gas supplies following the Ukraine conflict. In the aftermath, European April futures contracts surged to 45.46 euros ($53.26) per megawatt-hourThe spike in oil prices comes as US gasoline prices were already climbing ahead of the summer driving season. The national average for a gallon of regular fuel rose more than five cents last week to $2.98, according to AAA. Crude price fluctuations typically reflect at the pump within about 20 days, with a $10 increase in crude adding roughly 25 cents per gallon.In Europe, taxes make up the majority of fuel costs, but higher energy prices can still feed through the broader economy. Holger Schmieding, chief economist at Berenberg Bank, estimated that a sustained $15 per barrel increase could add 0.5 percentage points to consumer inflation in Europe.
