The start of March 2026 could mark a turning point for energy markets, according to some industry experts, as countries reliant on Middle East oil and gas supply look for safer alternatives.
Gas prices spiked on Monday as QatarEnergy shut down its liquefied natural gas (LNG) processing plants after missile attacks by Iran.
There was already uncertainty over the country’s LNG continuing to reach Asia given the danger of moving highly flammable cargoes through an area plagued with missile and drone attacks. Around 20 per cent of global LNG flows go through the Strait of Hormuz.
© Reuters
“Even partial disruption to a chokepoint handling 20mn barrels per day of oil and over 100bn cubic metres (bcm) of LNG annually produces a supply shock of historic proportions,” said analysts at ING.
They also underlined Iran’s own use of the strait to send oil to China, so the government would be damaging its own exports in continuing to attack its Gulf neighbours.
Iran’s share of global oil production is around 3 per cent.
For Europe, a gas price shock coming out of winter is not ideal, even if improving weather will lessen the hit to hip pockets. “European gas storage sits at the lowest level since 2022, leaving limited slack in the system for the disruption,” said analysts at Jefferies.
The European gas price surged around lunchtime on Monday, after QatarEnergy’s announcement, hitting almost €49 (£42.80) per megawatt hour (MWh) before dropping back to €44 later in the afternoon. Oil got close to $80 per barrel but dropped in afternoon trading to around $73.
The gas market was settling in for years of calm, as noted by British Gas owner Centrica (CNA) in its 2025 results last week, when the company said it was “well-positioned for an expected period of gas oversupply”. LNG supply has climbed since 2022 because of investment in gasification capacity in the US and Middle East. Shares in major US supplier Cheniere Energy (US:LNG) rose 5 per cent on Monday.
Investors have been positioning for disruption in the market, sending Cheniere up 25 per cent so far this year.
A prolonged rise in European gas prices would still be felt in the UK, given that they largely determine electricity prices.
Equity investors also added gas exposure on Monday. Equinor (NO:EQNR) climbed 8 per cent, while TotalEnergies (FR:TTE) was up 3 per cent. Shell (SHEL) and BP (BP.) also climbed 3 per cent on Monday.
The top riser in London was Tullow Oil (TLW), which climbed 20 per cent. The company’s shares have been in decline since 2024 as its debt pile has grown to look almost insurmountable. Tullow’s joint venture partner Kosmos Energy (KOS) announced higher production guidance for this year, which also helped propel the shares upwards.
Energean (ENOG) shares stayed flat even on the announcement that the Israeli government had shut down its Karish field for safety reasons.
Quilter Cheviot Maurizio Carulli said it would take a conflict of more than a few weeks to really disrupt markets. “There needs to be at least a month or two of a substantially different level of oil price to have a meaningful impact on quarterly indicators both at a company and at a macroeconomic level,” he said.
“If the situation calms down over the next few weeks, as it is well possible, the price is likely to revert to $60-$65 per barrel, given oil production is in excess of demand.”