Instability in the Middle East Drives Up Oil and Gas Prices

26 June 2025

Since mid-June, diesel and petrol prices have been rising sharply. The escalating tensions between Israel and Iran are the main cause of this increase. At the time of writing, the Strait of Hormuz remains open. However, should this crucial passage become blocked in the near future, shipping will undoubtedly be affected. In this article, we will explain the consequences for both the oil and gas trade.

Oil Price Surge Due to Middle East Tensions

Since the first Israeli airstrikes on Iran on Friday, 13 June, oil prices have been responding with significant increases. Unfortunately, at the time of writing, several attacks and bombings have already taken place on both sides.

These attacks triggered a remarkable 13 percent rise in oil prices within just a few hours. This is the fastest and largest increase since the spring of 2022, shortly after the onset of the Russia-Ukraine war.

Gas Prices on the Rise Again

President Trump’s trade war had caused gas prices to briefly drop. As energy demand decreased, this affected the prices. Unfortunately this dip now seems to have been short-lived, as, due to the ongoing tensions in the Middle East, the previously declining energy prices have reversed and are now rising again.

In the spring, gas prices were approximately €32 per megawatt-hour. Prices had not been lower since September 2024. The European gas exchange in Amsterdam has implemented a significant increase for its deliveries next month, offering €37.20 per megawatt-hour. This marks the largest inflation in just five weeks.

Severe Consequences if the Strait of Hormuz Were to Close

The strategically located and, for now, accessible Strait of Hormuz is off the coast of Iran. This vital link, essential for both the oil and (natural) gas trade, is crucial for the supply of oil from the Persian Gulf to the rest of the world. Most of this transport takes place by ship, with the exception of a small portion that is transported by pipeline, making the Strait of Hormuz a critical connection.

According to financial platform Bloomberg, more than 16 million barrels of oil pass through the strait each day, accounting for 20% of global oil trade. Particularly from Qatar, large volumes of gas are transported, including to Europe. A blockade of the Strait of Hormuz would therefore have catastrophic consequences for global trade.

Image: RTLZ.nl

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