The conflict in the Middle East is causing new shockwaves in energy and financial markets. European gas prices surged sharply on Tuesday morning, and oil prices returned to an upward trend, while major European stock exchanges deepened their losses amid fears of a prolonged energy crisis and reignition of inflation.
European gas reaches its highest level since February 2023
According to AFP, natural gas prices in Europe have risen again due to the escalation of the conflict and the closure of the Strait of Hormuz, as well as the halt of liquefied natural gas (LNG) production by the state energy company of Qatar, QatarEnergy.
Around 08:20 GMT, the futures contract on the TTF hub in the Netherlands - the benchmark for the European market - rose by over 23%, after previously recording a jump of over 33%. The price reached 59.445 euros/MWh, the highest level since February 2023, a period marked by increases caused by the war in Ukraine.
The blockade in the Strait of Hormuz, one of the most important maritime routes for global energy transport, amplifies fears of major supply interruptions.
Oil returns above $80 threshold
Oil prices also rose on Tuesday, amid estimates that the war could last longer than initially anticipated, and energy infrastructure remains a target.
Around 09:15 GMT, the barrel of North Sea Brent oil for May delivery rose by 5.45% to $81.98.
Similarly, the American West Texas Intermediate (WTI) barrel for April delivery gained 5.32%, reaching $75.02.
The price increases reflect investors' concerns about a potential prolonged crisis in the region and possible additional blockages in the transportation of oil and gas.
European stock exchanges under pressure
The financial markets' reaction was swift. Major European stock exchanges deepened their losses on Tuesday morning, with investors fearing a new round of inflationary pressures driven by rising energy costs.
Around 09:05 GMT, the Paris stock index fell by 2.15%, Frankfurt lost 2.78%, London 2.02%, and Milan 3.21%. At one point, Milan and Frankfurt markets recorded declines of over 3%.
The escalation of the conflict and uncertainties about its duration increase volatility in European markets at a time when investors were hoping for price stabilization in energy and a resumption of interest rate cuts in the eurozone.