Oil prices climbed again on Thursday, rising more than 5% while stocks sank as Iran attacked several Gulf energy facilities and warned of more in retaliation for a strike on one of its key gas fields, expanding the concerns over global supply.
Brent crude soared past $113 per barrel as Tehran threatened to target regional installations after an Israeli hit on a site serving its massive South Pars field, which it shares with Qatar.
Iranian missiles struck Qatar's Ras Laffan, the world's largest liquefied natural gas (LNG) hub, causing extensive damage and stoking energy supply fears as the war grinds on.
European gas jumped more than 30% after the strikes.
U.S. President Donald Trump said Washington "knew nothing" of Israel's attack on South Pars, but vowed "NO MORE ATTACKS WILL BE MADE BY ISRAEL" on the site if Tehran stops attacking Qatar.
But if Iran did not comply, the U.S. would "massively blow up the entirety of the South Pars Gas Field," Trump warned.
The Iranian strikes on Qatar came as Abu Dhabi shut down operations at a gas facility due to falling debris from missile interceptions.
Meanwhile, the U.N. nuclear watchdog said Iranian authorities had reported a projectile impact at the country's only operational nuclear power plant but that it caused no damage.
"We warn you once again that you made a big mistake in attacking the energy infrastructure of the Islamic Republic," the Revolutionary Guards said in a statement carried by Iranian media.
"If it is repeated again, further attacks on your energy infrastructure and that of your allies will not stop until it is completely destroyed."
Iranian President Masoud Pezeshkian wrote on X that the attacks on South Pars "will complicate the situation and could have uncontrollable consequences, the scope of which could engulf the entire world."
Brent spiked more than 5% to hit a peak of $113.77, its highest since the first Monday after the first Feb. 28 U.S.-Israeli strikes on Iran, when it nearly touched $120. West Texas Intermediate was sitting around $97.
The increased tension hit equities, which had enjoyed a broadly positive start to the week thanks to a fresh rally in tech firms.
Tokyo tanked more than 3% and Seoul more than 2%. Hong Kong, Shanghai, Sydney, Singapore, Taipei, Wellington, Mumbai, Manila and Bangkok were also down.
French President Emmanuel Macron said on X: "It is in the common interest to implement without delay a moratorium on strikes targeting civilian infrastructure, particularly energy and water infrastructure."
Markets have been hammered since the start of the war, with Tehran hitting sites across the Gulf and effectively closing the Strait of Hormuz, through which a fifth of global oil and gas flows.
The surge in energy costs has fanned fears of another surge in inflation and raised the possibility of higher interest rates.
Those concerns were compounded on Wednesday with data showing U.S. wholesale inflation rose more than expected in February.
Federal Reserve (Fed) Chair Jerome Powell then said he expected higher energy costs to boost price rises in the near term, but added that little was clear at this point.
"We're right at the beginning of this, and we don't know how big, you just don't know how big this will be and how long it lasts," he said after the bank held interest rates. Officials would have to "wait and see," he said.
The Bank of Japan (BOJ) held rates on Thursday and also warned it saw inflation spiking on the back of the crude surge. That came after the Reserve Bank of Australia (RBA) hiked its key rate on Tuesday, pointing to "sharply higher fuel prices."
Eyes are on decisions later in the day by the European Central Bank (ECB) and the Bank of England (BoE).
Key figures at around 7 a.m. GMT
West Texas Intermediate (WTI): up 1.0% at $97.31 per barrel
Brent North Sea Crude: up 5.7% at $113.53 per barrel
Tokyo – Nikkei 225: down 3.4% at 53,372.53 (close)
Hong Kong – Hang Seng Index: down 2.0% at 25,505.82
Shanghai – Composite: down 1.4% at 4,006.55 (close)
Euro/dollar: up at $1.1454 from $1.1451 on Wednesday
Pound/dollar: up at $1.3254 from $1.3256
Dollar/yen: down at 159.64 yen from 159.87 yen
Euro/pound: up at 86.43 pence from 86.38 pence
New York – Dow: down 1.6% at 46,225.15 (close)
London – FTSE 100: down 0.9% at 10,305.29 (close)
