European Stocks Deepen Slump as Iran War Supercharges Energy Prices

European stocks declined sharply for a second day, diverging from US stocks which had erased most of their losses overnight, as the region’s vulnerability to sharply rising energy prices became apparent.

TTF, the European gas benchmark, continued its rapid price increase a day after Qatar shut off production at its Ras Laffan facility amid Iranian attacks. Ras Laffan is the source of about a fifth of global liquefied natural gas supplies.

“EU storage is low, as cold weather depleted stockpiles, with an expectation of plenty of supply in 2026 as new American and Qatari production comes online,” Morningstar analyst Adam Baker says. “The EU will be competing with Asian buyers who consume Qatar’s volumes.”

Meanwhile, Brent crude oil also continued its climb above the USD 80 threshold.

“Oil supply disruption should continue into next quarter and European gas prices will be pushed up due to the need to replenish storage,” says Riccardo Marcelli Fabiani, senior economist at Oxford Economics.

The Morningstar Europe Index fell 2.9% at Tuesday’s open, deepening its slump this week to 4.4%, on track for its worst weekly loss since the week ended April 4, when a slew of US tariff measures drove an 8% selloff in European stocks.

European stocks’ second day of steep declines marked a departure from US peers, which had erased earlier losses by Monday’s US close, and appeared on track for significant, but less steep declines.

Futures on the S&P 500 index were down 1.5% and those on the technology-heavy Nasdaq 100 down 2%. In premarket trading, the US’s worst performers included power distributor Entergy ETR, down 20%, while ‘Magnificent Seven’ stocks all declined, with Nvidia NVDA down more than 3% ahead of the regular market open.

The euro, meanwhile, continued to weaken against the dollar, falling to USD 1.16 from USD 1.18 on Friday. The spot gold price pared its gains from the first days of the war.

Inflation across the euro area picked up even before the war’s onset, with preliminary data for February showing an unexpected acceleration to 1.9% in February, up from 1.7% in January. Economists had expected the figure to remain at January’s level.

“If tensions ease and trade can resume, we expect Qatar to quickly ramp up [gas] production, as its economy is heavily reliant on LNG exports,” Morningstar’s Baker says. “This war is not analogous to Ukraine, which created a multiyear disruption and total phase-out of Russian energy.”

Sara Silano, Sunniva Kolostyak and Francesco Lavecchia contributed to this story.