Middle East escalation leaves significant upside for oil and gas markets in Oil & Companies News 03/03/2026 US strikes come sooner than expected, while Iran responds aggressively While action taken by the US and Israel against Iran this weekend may not be a complete surprise, the timing is, given that the US and Iran were due for another round of nuclear talks. Therefore, there was still a glimmer of hope that a diplomatic solution could be found. This is clearly not the case. The attacks on Iran have also made it clear what US ambitions are. It is not purely about ensuring that Iran doesn’t have the ability to produce nuclear weapons, but also to push for regime change. This was clear in President Trump’s speech urging Iranians to take over their government and that it will be theirs to take. Meanwhile, the successful targeting of Iran’s Supreme Leader Ali Khamenei only reinforces this view. However, actual regime change is easier said than done, particularly when the US and Israel have no ground presence. This makes any shift in power more difficult, while also meaning that any potential transition could be very messy if led by Iranian civilians, as President Trump has called for. While it is still very early days and the situation is developing at a fast pace, it does not appear that this military action will be quick and short-lived, like seen in June 2025. Israel has said that action will take as long as needed. There has also been a strong response from Iran, targeting Israel, US bases across the region and civilian infrastructure in some neighbouring Gulf states. The strong response from Iran highlights that the regime is essentially fighting for survival, while attacks on neighbouring countries could be an attempt by Iran to get these Gulf countries to put pressure on the US to end its strikes. Energy markets face significant supply risks It appears that we are moving towards our third potential scenario that wepublished last week, where we see prolonged military action and an aggressive response from Iran. For energy markets, we expect an aggressive price response when markets open. ICE Brent could trade into the region of $80-90/bbl immediately, with risks for further strength towards $100/bbl and ultimately $140/bbl (worst-case scenario), if we are to see significant and extended oil supply disruptions. Meanwhile, European gas and Asian LNG prices could potentially see relatively more aggressive moves, given the risks to Qatari LNG flows and the market being relatively tighter. If LNG/gas markets start to price in an extended period of losses to Qatari LNG supply, TTF could potentially spike to EUR 80-100/MWh ($28-35/MMBtu). In terms of potential impact, there have already been unconfirmed reports of strikes on Iran’s Kharg Island, where basically all of Iran’s oil is exported from. This would be in the region of 1.5m b/d of oil, which goes predominantly to China. Meanwhile, for gas markets, as a precaution, Israel has temporarily shut its Leviathan and Karish gas fields, which produce roughly 17bcm per year. But most importantly, Iran has also reportedly announced the closure of the Strait of Hormuz. This is a key choke point for global energy markets, with 20m b/d of oil and more than a 100bcm of LNG per year moving through it, which is around 20% of global LNG trade. However, it would be difficult to enforce a closure and any attempts to do so would likely see a strong response from the US. Vessels are becoming increasingl