Renewed uncertainty across global energy and financial markets

The situation in the Middle East has escalated sharply, creating renewed uncertainty across global energy and financial markets

 
Patrick Farrell, Chief Investment Officer at Charles Stanley, part of Raymond James Wealth Management
 

The conflict has now entered a dangerous new phase, with Iran launching a series of strikes on critical oil and gas facilities across the Gulf. Qatar – the world’s second‑largest LNG exporter, responsible for nearly 20% of global supply – has already halted LNG production after successive strikes, heightening fears of a prolonged disruption to natural gas flows.

Shipping risks have risen dramatically, highlighting the vulnerability of maritime routes near the Strait of Hormuz, the world’s most important oil chokepoint. Insurance costs for tankers and cargo transiting the strait have surged, although coverage remains available.

Qatar’s Ras Laffan complex is the world’s largest LNG production centre, a linchpin of global gas markets, and a strategic supplier to Europe and Asia. Damage to this facility has immediate international repercussions:

• Global gas prices have surged, with European benchmarks jumping nearly 30% following the strikes.
• Oil prices have also spiked as markets assess the risk of a broader supply crunch that could push Brent crude above $130 if the crisis worsens.
• The attacks raise the prospect of long-term damage to production capacity, not just short-term outages, given the scale of the fires and destruction reported across multiple facilities.

With the Strait of Hormuz effectively choked off to routine tanker traffic and energy infrastructure across the region under intensifying fire, the conflict now threatens the global energy system, not just regional stability. Even if hostilities ease, damaged facilities could take months to bring back online, delaying any normalisation of supply and affecting global markets long after any ceasefire.

By directly targeting Qatar’s vital LNG infrastructure, Iran has struck at the heart of the world’s gas supply chain. With oil and gas markets already on edge and major export routes disrupted, the latest escalation represents a severe threat to global energy security — and there is still no clear sign of de‑escalation.

As a result of developments over the past week, please see the following scenario probabilities:

These developments have significant implications for global inflation, particularly for Europe and Asia, which depend heavily on energy imports. US inflation was already rising before the crisis intensified, with producer prices in February increasing far faster than expected. This leaves central banks facing the risk of stagflation, complicating efforts to tighten policy without undermining growth.

In this environment, maintaining a well‑diversified portfolio remains the most effective way to manage uncertainty.

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