The ongoing Middle East conflict has unleashed significant economic disruptions globally, with European markets experiencing substantial declines on Thursday. Investor sentiment deteriorated as Brent crude oil surged nearly 6% to approach $119 per barrel before settling around $110, while European natural gas prices witnessed an alarming 28% spike. These energy price surges have intensified inflationary pressures and growth concerns across continental economies.
European equity markets closed with losses exceeding 2%, with Frankfurt, London, and Paris all finishing deep in negative territory. Wall Street mirrored this downward trend, declining approximately 0.8% during mid-session trading. Precious metals also faced substantial selloffs, with gold and silver prices dropping over 6% and 13% respectively as inflation fears diminished expectations for near-term interest rate reductions.
The energy sector faced particular turmoil following reports of ‘extensive’ damage to Qatar’s Ras Laffan facility, the world’s largest liquefied natural gas (LNG) hub, after Iranian strikes. Additional attacks targeted Kuwaiti oil refineries and Saudi Arabia’s Samref refinery in Yanbu’s industrial zone, raising serious concerns about global energy supply stability.
In response to the escalating crisis, the International Maritime Organization (IMO) convened emergency talks in London, resulting in calls for establishing a safe shipping corridor in the Gulf region. This provisional measure aims to facilitate the evacuation of stranded vessels and seafarers, with six Western nations including Britain, France, Germany, and Japan expressing readiness to ensure safe passage through the critical Strait of Hormuz.
The European Central Bank revised its economic projections downward, reducing its 2026 eurozone GDP growth forecast from 1.2% to 0.9% while elevating inflation expectations to 2.6% from the previous 1.9% estimate. Germany is contemplating a windfall tax on energy sector profits, with Finance Minister Lars Klingbeil evaluating measures to ‘skim off excessive crisis profits’ resulting from surging oil prices.
Meanwhile, U.S. Treasury Secretary Scott Bessent indicated Washington might temporarily ‘unsanction’ Iranian oil already in transit and potentially release additional reserves from strategic petroleum stocks to alleviate energy market pressures.
The conflict has additionally exposed European aviation’s dependency on Gulf carriers, with Air France-KLM CEO Benjamin Smith noting that approximately 100 aircraft normally operating through European hubs remain grounded. Many travelers find themselves stranded across Asia, unable to transit through major Gulf hubs including Dubai, Doha, and Abu Dhabi.