The US and Israel launched surprise missile strikes on Iran on 28 February, prompting retaliation across the Arab Gulf and heightening fears of a broader regional conflict. With tensions centred on the Strait of Hormuz, a key energy chokepoint, global oil, LNG and chemical supplies are under threat.

ICIS experts report that Brent crude surged more than 8% in early Asian trade on 2 March, briefly exceeding $82 per barrel before easing back above $78, while WTI traded around $72. Shipping through the Strait of Hormuz has effectively halted, bringing Gulf oil and LNG exports close to a standstill. LNG tanker crossings have stopped since 28 February, disrupting around 120 bcm per year of supply from Qatar and the UAE, a volume comparable to the gas Europe has lost from Russia since 2021.

Petrochemical markets have also reacted, with China’s methanol futures rising more than 6% amid concerns over Iranian supply. Iran is the world’s second largest methanol producer. ICIS analysis highlights that the risk of prolonged Iranian disruption and potential closure of the strait is reshaping market expectations and pricing behaviour, with Brent potentially approaching or exceeding $100 per barrel if the closure persists, although renewed US Iran talks could limit further gains.

The strikes, which reportedly killed Iran’s Supreme Leader Ayatollah Ali Khamenei, came amid recent nuclear negotiations in Geneva, adding to already elevated crude prices and heightening uncertainty across global energy and chemical markets.

Key highlights

US and Israeli strikes on Iran spark retaliation and wider regional instability

Strait of Hormuz effectively shut, halting oil and LNG flows

Brent briefly exceeds $82 per barrel and remains elevated

LNG disruption impacts around 120 bcm per year of supply from Qatar and the UAE

China methanol futures rise more than 6% on Iran supply concerns

Rising risk of prolonged disruption reshaping pricing behaviour

Brent could approach or exceed $100 per barrel if the closure persists

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*With developments unfolding rapidly, ICIS experts are available to provide updated insight and discuss the market impact in more detail.

Source: ICIS