War in the Middle East: European stock markets fall, European gas soars by more than 50%

European stock markets opened lower on Monday, weighed down by uncertainty and the rise in oil prices, in the face of the American-Israeli military operation against Iran and Tehran’s retaliation on several countries in the Middle East. In detail, the Paris Stock Exchange fell by 2.36% at the opening, Frankfurt by 2.29%, London by 0.93%.

The price of European gas is exploding due to the conflict, which compromises the export of liquefied natural gas from the Gulf, and in particular exports from Qatar. Shortly before 2 p.m., European gas soared by more than 50% after Qatar Energy stopped LNG production.

Around 8 a.m. (GMT), the Dutch TTF futures contract, considered the European benchmark, was already up more than 20%, after having jumped 22%, to 38.885 euros.

This Monday, Foreign Minister Jean-Noël Barrot recalled that “de-escalation is necessary”. “The indefinite extension of military operations across this region could trigger a very serious spiral threatening our own interests and some of our economic interests. This is why all efforts must be made towards this de-escalation,” he insisted during a press conference on the situation in the Middle East.

“Supply chain disruptions”

Markets are suffering from “the intensification of geopolitical tensions in the Middle East”, and their “potential repercussions on regional stability and energy flows”, notes John Plassard, head of investment strategy at Cité Gestion Private Bank. They are particularly concerned about “the significant rise in oil prices”, and “disruptions to supply chains”, with “the risk of higher inflation”, explains Kat Hudson, director of investment strategies at Hargreaves Lansdown.

Maritime traffic is in fact paralyzed in the Strait of Hormuz, a nerve center for global hydrocarbon trade where ships have been affected, and which is now avoided by the world’s main shipowners due to the conflict.

Oil prices jumped: around 7:10 a.m. GMT, a barrel of Brent from the North Sea soared 7.64% to $78.44, after opening at more than $82. A barrel of North American WTI gained 7.18% to $71.83. As a result, the dollar, international currency for the oil market, gained 0.74% to 1.1726 dollars per euro. A safe haven, the dollar gained more than 1% against the pound. Gold, a safe haven in the event of uncertainty, gained 2.12% to $5,390.74 per ounce.

Massive bombings target Iran again on Monday, the third day of the operation intended to decapitate the Islamic Republic, a conflict which now extends to Lebanon where Israel carries out strikes after Hezbollah fire against its territory. While the war has claimed its first American victims and Donald Trump has said he is considering an operation lasting several weeks, each side is showing its determination to continue hostilities, raising fears of a general conflagration in the region.