Iran escalated its military response in the Gulf region on Thursday by launching missile attacks on energy infrastructure in Qatar and the United Arab Emirates, following an Israeli strike on Iran's South Pars gas field, the world's largest gas field jointly owned by Iran and Qatar [1][3]. The attacks set Qatari liquefied natural gas (LNG) facilities ablaze, causing 'sizeable fires and extensive further damage' at a major site where production had already been halted after earlier attacks. QatarEnergy, the world's second-largest LNG exporter, had previously declared force majeure on LNG shipments and halted production at its 77 million tons per annum facility on March 2 [1][2]. The attacks also forced the shutdown of the Habshan gas facility and Bab field in the UAE [1].
The conflict has sent Brent crude oil prices above $110 a barrel, marking a more than 50% increase since the war began on February 28 with Israeli and U.S. strikes on Iran [1][3]. The surge in oil prices has triggered inflation fears and contributed to sharp declines in global equity markets. Asian technology stocks fell significantly, with SK Hynix down 2.23%, Samsung Electronics down 1.8%, Seoul Semiconductor down 2.53%, Advantest down over 4%, Tokyo Electron down 1.99%, TSMC down 2.1%, MiniMax down 10%, and Knowledge Atlas Technology (Zhipu) down 8%. Major Chinese tech stocks Alibaba and Tencent also dropped 3.34% and 6%, respectively [2]. European markets are expected to open lower, with the FTSE, DAX, CAC 40, and FTSE MIB all projected to fall between 0.9% and 1.6% [3].
The attacks on Qatar's Ras Laffan Industrial City, a critical hub for LNG and helium production, have raised concerns about global supply chains for both LNG and helium, the latter being essential for semiconductor manufacturing and medical imaging. Qatar produces over a third of the world's helium supply as a by-product of natural gas processing. Analysts at Fitch Ratings and Gartner highlighted that ongoing disruptions could further tighten helium supply, with no viable alternatives available, posing a 'rising tail risk' for Asia's semiconductor supply chain [2].
European companies importing semiconductors from Asia are experiencing delays and increased delivery costs due to the conflict's impact on air freight routes through the Middle East. Global air freight capacity is down around 9% compared to pre-war levels, leading to higher costs and some manufacturers importing fewer chips. European firms are tapping backup inventories and paying premium rates to secure deliveries, with some reporting delays of a few days. Jet fuel, which constitutes 50% of airline operating costs, is also surging in price due to the oil spike [4].
Political leaders have issued warnings and statements. Iranian President Masoud Pezeshkian warned of 'uncontrollable consequences' that could 'engulf the entire world' following the strike on South Pars [1]. U.S. President Donald Trump stated that Israel would not attack South Pars again but warned that the U.S. would 'massively blow up the entirety of the South Pars Gas Field' if Iran continued targeting Qatar's energy facilities [1][3].
Central banks in Europe, including the ECB, Bank of England, Riksbank, and Swiss National Bank, are expected to hold rates steady as they assess the war's impact on growth and inflation [3].
CONCLUSION
The escalation of the Iran-Israel conflict has severely disrupted global energy and semiconductor supply chains, driving oil prices sharply higher and triggering broad declines in equity markets across Asia and Europe. With critical LNG and helium supplies at risk and air freight capacity constrained, inflationary pressures and supply chain disruptions are expected to persist, keeping markets on edge as the situation develops.