Escalating conflict in the Middle East sent global markets sharply lower on Thursday after Iran launched attacks on energy infrastructure across the region, pushing oil and gas prices to multi-year highs.
Brent crude, the international oil benchmark, jumped 6.7% to $114.77 a barrel, having climbed from $102 to $109 the previous afternoon, as traders priced in the risk of prolonged supply disruption.
European natural gas futures surged around 25% to above €68 per megawatt hour, their highest level in over three years, while UK natural gas prices leapt to 170p per therm, also the highest since 2023.
Iran's attacks caused extensive damage to one of Qatar's largest liquefied natural gas (LNG) export plants, while Kuwait reported a drone strike had started a limited fire at the Mina Abdullah refinery, which is one of the Middle East's largest. Ships were also reported to be burning off the coasts of the UAE and Qatar.
Market analyst Ipek Ozkardeskaya at Swissquote said Iran's threats against Gulf neighbours had turned markets "upside down," with Iranian officials declaring their energy facilities had become "a legitimate target."
The FTSE 100 fell 133 points 10,172 in opening trades, extending the fall since lunchtime yesterday to over 250 points.
US stocks fell overnight, with the Dow Jones dropping 768 points or 1.6%, while the S&P 500 and Nasdaq lost 1.4% and 1.5%, respectively.