The major escalation began on 28 February 2026 when Israel and the United States launched military strikes on Iran, prompting retaliatory attacks on Israel, US bases, and energy infrastructure across several Gulf states. Iran also targeted shipping in the Strait of Hormuz, sharply reducing vessel traffic through the world’s most important oil and LNG chokepoint. By mid‑March 2026, around 20 million barrels per day of oil were affected by the decline in shipping, oil production across Gulf states had fallen by at least 10 million barrels per day (approximately 10% of global output) and LNG exports from both Qatar and the UAE were severely disrupted.
The International Energy Agency (IEA) confirmed that this represents the largest supply disruption in global oil market history, with LNG supplies falling by roughly 20% and more than 3 mb/d (million barrels per day) of Gulf refining capacity forced offline due to attacks. As a result, Brent crude surged from around $70/bbl to a peak of more than $118/bbl (per barrel), before easing back slightly amid extreme volatility driven by shifting conflict developments and constant news coverage.
To stabilise global supply, the IEA coordinated its largest‑ever emergency release of oil stocks. Gas markets also reacted sharply: UK and European gas benchmarks rose significantly as traders priced in the growing risk of prolonged supply disruption. UK wholesale natural gas prices climbed by approximately 75% between late February and mid‑March, while European prices hit a 13‑month high, raising renewed concerns about affordability and energy security. The Dutch TTF front‑month benchmark is currently up by around 68%, and the UK NBP benchmark has risen by nearly 75% compared with pre‑conflict levels.
Market sentiment also deteriorated following direct damage to critical energy infrastructure. Qatar’s Ras Laffan LNG facility sustained extensive damage leading the country to halt gas production, while Saudi Arabia was forced to pause output at one of its refineries after drone attacks. These incidents, along with the risk of further strikes on energy infrastructure, mean the effects of the conflict are likely to reverberate through global energy markets for years to come.
Although the UK imports only around 2% of its gas directly from Gulf states, it remains highly exposed to global price movements due to its reliance on internationally traded LNG and competition for spot cargoes. UK gas prices surged by 40–50% within days as traders responded to the prospect of prolonged LNG disruption. Because gas‑fired power generation sets the UK’s wholesale electricity price more than 80% of the time, rising gas prices quickly translate into higher electricity costs.
UK households have so far been partially shielded from rising electricity prices, as the April–June 2026 price cap was set at £1,641 before the conflict began. This means households on standard variable tariffs will not feel the impact of higher wholesale prices until July. Businesses, however, face a more immediate challenge. With wholesale electricity price volatility increasing sharply, many must now decide whether to lock in fixed prices or remain exposed to fluctuating market rates in the hope that prices will fall if the conflict eases. Contracts renewing later in 2026 may benefit from waiting, as much of the current volatility is driven by market sentiment rather than immediate supply shortages.
In the UK, the crisis has reinforced the Government’s focus on accelerating the transition to a more resilient energy system. This includes speeding up the deployment of renewables and battery storage, reducing dependence on marginal‑price‑setting gas generation, and pursuing a strategic decoupling of electricity prices from gas.
The 2026 Middle East conflict has triggered the most severe disruption to global oil and gas supplies in modern history, surpassing even the shocks associated with the Russia–Ukraine conflict. The resulting surge in global energy prices has fed directly into UK wholesale markets. Although the UK relies only minimally on direct imports from Gulf states, its deep integration into global energy markets means households and businesses will inevitably face higher prices consequently. Looking ahead, the UK’s long‑term resilience will depend on accelerating the shift toward renewables and expanding energy storage capacity.