25MAY

Brent nears $111 as energy war widens

4 min read

13:55UTC

Three weeks of conflict have pushed Brent from post-pandemic lows to its highest level since 2014. The simultaneous damage to South Pars and Ras Laffan has taken a fifth of global LNG capacity into an active combat zone.

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ConflictDeveloping

Key takeaway

European gas storage at a five-year low entering refill season makes a winter energy crisis near-certain if Ras Laffan stays offline.

Brent Crude surged toward $110.90 per barrel on Tuesday — up from $106.18 a day earlier and 64% above the pre-war level of $67.41. WTI advanced to $98.60. The European gas benchmark jumped more than 30% ¹. Three weeks of conflict have taken Brent from its lowest point since 2021 to its highest since 2014.

The cause was direct. Israel struck South Pars — the world's largest natural gas reserve, supplying roughly 70% of Iran's domestic gas — and Iran retaliated against Qatar's Ras Laffan Industrial City within hours. Ras Laffan processes approximately 77 million tonnes of LNG per year, roughly 20% of global supply. Both facilities are now damaged, and no alternative supply route exists at scale for that volume. South Pars shares a geological formation with Qatar's North Dome — the source of Qatar's entire LNG export industry — which means the physical reservoir underlying both nations' gas wealth cannot be isolated from the conflict.

The downstream effects are already measurable. US gasoline reached $3.84 per gallon — up $0.86 since 28 February — and diesel hit $5.07, its highest since 2022 ². Fortune, citing economists, reported March inflation could reach 1%, the steepest monthly increase in four years ³. The Atlantic Council warned European gas storage stands below 30%, a five-year low, as the critical refill season begins ⁴. Chatham House assessed two days ago that sustained conflict could push Brent to $130 and tip the eurozone into contraction in Q2 . Tuesday's prices are tracking ahead of that scenario.

The three-week trajectory reflects compounding supply loss. Gulf oil exports have dropped at least 60% compared with February . the strait of Hormuz carries single-digit daily transits against a pre-war average of 138 . The IEA's record 400-million-barrel strategic reserve release failed to hold prices below $100 . Each escalation — Kharg Island , Iran's threat to strike Gulf oil infrastructure , and now the South Pars–Ras Laffan exchange — has removed supply that strategic reserves cannot replace. The market is pricing physical scarcity.

Deep Analysis

In plain English

Oil at $110.90/barrel affects almost everything: petrol, diesel, aviation fuel, plastics, food transport, fertiliser. Those effects flow through supply chains over weeks to months and have already begun arriving at petrol stations. The gas story is separately serious for European households. Europe heats homes and generates electricity partly with liquefied natural gas imported by ship. Qatar's Ras Laffan, now damaged, supplies roughly 20% of all globally traded LNG — there is no alternative supplier at that scale. Europe was already entering its critical summer storage-refill season with reserves at a five-year low, below 30%. Storage needs to reach roughly 90% by November for safe winter heating. If Ras Laffan stays offline through summer, that target becomes arithmetically unreachable with available alternative supplies.

Deep Analysis

Synthesis

The European gas benchmark's 30%+ single-session move is analytically more significant than Brent's rise, yet the body treats it as secondary. Oil has genuine supply substitutes that can mobilise over months; LNG from Qatar has almost none at the volumes Europe requires. Europe now faces simultaneous supply destruction — Ras Laffan damage — and demand compression failure — industrial gas use cannot be reduced quickly without triggering economic contraction. This is a classic energy security trap where the available policy responses all carry severe costs.

Root Causes

Three structural amplifiers make this shock more damaging than headline prices indicate. First, LNG has no swing supplier at scale — unlike oil, where US shale, Canadian oil sands, and OPEC+ releases can partially offset Gulf losses, Qatar's volume cannot be replicated from elsewhere within months. Second, European gas storage below 30% reflects under-investment in storage infrastructure since the 2022 Russia shock — a pre-existing structural vulnerability the market had not adequately priced. Third, war-risk shipping insurance premiums for Hormuz transits multiply delivered commodity costs independently of spot prices, affecting every cargo moving through the strait.

What could happen next?

3 risk2 consequence

Risk
European gas storage below 30% entering the refill season creates near-certain rationing risk if Ras Laffan damage persists beyond June.
Medium term · Assessed
Consequence
Aviation kerosene costs will rise 40–55% above pre-war hedging positions as airline fuel contracts expire across the coming six weeks.
Short term · Assessed
Risk
Fertiliser prices linked to natural gas costs will elevate food prices through the autumn planting cycle, extending inflation well beyond the energy sector.
Medium term · Suggested
Risk
Central banks face a stagflationary dilemma — raising rates to combat energy-driven inflation risks tipping already slowing economies into recession.
Medium term · Suggested
Consequence
War-risk shipping insurance adds an estimated $3–7/barrel hidden delivered cost beyond spot prices, affecting all major oil-importing nations including Japan, South Korea, India, and China.
Immediate · Suggested

Source Landscape

This story draws on mixed-leaning sources from United States

United States×2

LeftRight

Primary parallel: The 1979 Iranian revolution disrupted approximately 4% of global oil supply, triggering a second oil shock that contributed to double-digit US inflation and global recession. The current shock is simultaneously hitting oil and gas markets — a compound disruption without a direct 1979 equivalent, since LNG as a globally traded commodity barely existed then.

Counter-parallel: The 1990 Gulf War oil shock — also originating in the Persian Gulf — reversed within six months as Saudi spare capacity offset lost Iraqi and Kuwaiti production. That buffer mechanism still exists today but is now politically contingent on a Saudi Arabia that is itself under Iranian missile attack.

Why it’s relevant now

The 1979 shock moved oil from roughly $15 to $35/barrel across twelve months. The current move — $67.41 to $110.90 in three weeks — is proportionally faster and structurally broader. The critical variable distinguishing stabilisation from crisis escalation is whether Saudi spare capacity is deployed, withheld, or destroyed.

Three transmission channels not in the body deserve separate attention.

First, aviation kerosene tracks crude closely. Airlines hedging pre-war at roughly $70/barrel equivalent now face spot costs approximately 55–60% above their hedged positions as contracts expire. Summer travel season begins in approximately six weeks — ticket prices will rise as hedges roll off, hitting consumer spending at a seasonally critical moment.

Second, natural gas is the primary feedstock for ammonia-based fertilisers. European gas at 30%+ above pre-war levels flows directly into agricultural input costs for the autumn planting cycle. Food price inflation consequences arrive 9–12 months later.

Third, war-risk shipping insurance for Hormuz transits — during the 1987–88 Tanker War, Lloyd's premiums reached 0.5% of vessel value per voyage, roughly $500,000 per VLCC transit. Current premiums likely exceed that level substantially. These costs are paid by cargo owners and ultimately consumers, adding an estimated $3–7/barrel hidden inflation component to delivered prices for importing nations — a cost invisible in headline crude figures.

Consensus view: The IEA has repeatedly warned since 2023 that Europe's LNG diversification strategy remained dependent on Qatari supply as the critical swing provider, with no single alternative capable of substituting volumes above 40 million tonnes per annum. The Atlantic Council's 2025 energy security report rated a Ras Laffan disruption as a 'known tail risk' that storage buffers were insufficient to absorb.

Counter-view: China's National Energy Administration analysts have noted that Chinese long-term LNG contracts with Qatar include diversion provisions — Beijing could theoretically redirect spot cargoes to Europe. However, this would require Chinese buyers to accept significant contract penalties and would be commercially and politically explosive given China's own energy security priorities.

Key tension: The difference between a weeks-long and a months-long Ras Laffan outage is the difference between a severe price spike and a European winter heating crisis — and that timeline is currently unknown.

First Reported In

Update #41 · South Pars struck; Iran hits Qatar's LNG

CNBC· 19 Mar 2026

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Causes and effects

Caused by

Brent breaks $106, 50% above pre-war

Brent rose from $106.18 to $110.90 following South Pars and Ras Laffan strikes

Occurred 15 Mar 2026

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This Event

Brent nears $111 as energy war widens

The simultaneous damage to South Pars and Ras Laffan has pushed oil to its highest level since 2014 and placed approximately 20% of global LNG capacity inside an active combat zone. European gas storage at a five-year low faces potential supply crisis before the autumn refill season.

Led to

Brent touches $119 before falling back

Brent continued rising from $110.90 to $119 intraday as energy strikes expanded

Occurred 18 Mar 2026

Read story →

Different Perspectives

Lloyd's of London

The Joint War Committee left Hormuz war-risk premiums at $10-14 million per voyage on 25 May, declining to move on Brent's 5% fall. The JWC's protocol requires a UN Security Council resolution or bilateral government certification letter before de-listing, and neither has arrived: a verbal understanding does not satisfy the formal condition the reinsurance market's treaty terms require.

Gulf Arab producers

Saudi Arabia and UAE depend on Hormuz for their own crude exports; Aramco CEO Nasser has warned no oil market recovery arrives until 2027 if the blockade continues past mid-June. Monday's $98.96 Brent settlement shortens nothing for Gulf producers without a signed instrument and a Pentagon mine-clearance timeline that runs up to six months post-ceasefire.

Qatar

Qatar holds $12bn of frozen Iranian assets at the centre of the sequencing dispute but cannot release them without explicit US Treasury authorisation, given the original freeze was a US instrument. As the asset-holding state, Qatar's leverage is real but passive: it is the escrow holder, not the decision-maker, and any resolution requires US Treasury sign-off that Trump has withheld.

Pakistan

With both Prime Minister Sharif and army chief Munir simultaneously in Beijing on 25 May, Pakistan has for the first time consolidated its civilian and military mediation tracks under China's roof. Munir's direct Tehran-to-Beijing flight signals that the security and financial threads of the sequencing problem are now being worked in parallel rather than sequentially.

China

Beijing hosted Pakistan's principal mediators and Iran's China envoy Ghalibaf simultaneously on 25 May while its banking regulator capped new state-bank lending to five sanctioned refiners. China is simultaneously the most credible third-party underwriter of the $12bn sequencing and the state whose institutions face live OFAC secondary-sanctions exposure if the deadlock persists through GL V's expiry.

United States

Trump posted on 24 May that the blockade holds until a deal is certified and signed, ruling out the informal MOU structure both sides had been building. The 'certified, and signed' condition is the first operational bar Trump has attached in 87 days, but it arrived without an executive instrument, maintaining the gap between posted ultimatum and signed US policy.

Key Figures

Brent crude$110.90

WTI crude$98.60

European gas benchmark+30%

In everyday terms

UK and European household energy bills could rise sharply this autumn if Ras Laffan remains offline through the summer refill season. US drivers face further petrol price increases if the conflict persists — each additional $10/barrel in crude adds roughly 8–10 cents per gallon at the pump.

What’s Uncertain

Ras Laffan repair timeline critical and unknownThe difference between a weeks-long and a months-long outage determines whether Europe faces a price spike or an arithmetically unavoidable winter storage shortfall.

Saudi spare capacity deployment decision pendingSaudi Arabia's 2 million b/d spare capacity could moderate oil prices significantly but its deployment is now contingent on a deteriorating political situation in which Riyadh itself is under attack.

Hormuz transit continuity not guaranteedCurrent price models assume partial Hormuz transit continuity; full closure would invalidate all existing supply and price projections within 72 hours.

Sources

2 centre

United States

Centre-left

CNBC Oil jumps as Iran strikes Qatar LNG facility, supply worries mountUS financial and business cable news network

Centre

Atlantic Council How the Iran war could trigger a European energy crisisUS transatlantic policy think tank

Entities Involved

Ukraine weapons export ban (2022) →Iran →Tanker War →National Security Council (Iran) →The Atlantic →

Evidence & sources

2 sources