15th July 2026
The threats to oil and gas prices continues not least by Donald Trumps latest threat to bomb electricity capacity in Iran. This may then lead to even more retaliation against production facilities in the middle east countries.
What bombing Iran’s electricity system would actually mean
If large‑scale strikes hit Iran’s power‑generation capacity—major gas‑fired plants, transmission hubs, and grid infrastructure—the immediate effects inside Iran would be severe:
Blackouts and grid instability: Cities, industry, and critical services would face rolling or prolonged power cuts.
Industrial shutdowns: Refineries, petrochemical plants, steel, cement, and other heavy industry depend on stable electricity; output would drop sharply.
Water, health, and communications: Pumping stations, hospitals, and telecoms networks would all be disrupted, deepening social and economic stress.
Economic contraction: Iran’s already fragile economy would take another hit, with jobs, exports, and domestic production all affected.
It wouldn’t just be “lights out”—it would be a systemic shock to Iran’s entire economy.
Likely Iranian retaliation: oil, gas, and regional infrastructure
If Iran’s power grid were bombed, retaliation would almost certainly escalate beyond what we’ve already seen:
More attacks on Gulf energy infrastructure: Refineries, LNG plants, export terminals, and pipelines in Saudi Arabia, UAE, Kuwait, Qatar, and Bahrain would be prime targets.
Greater use of proxies: Militias in Iraq, Syria, Lebanon, and Yemen could intensify attacks on energy facilities and shipping.
Strait of Hormuz pressure: Iran could move from intermittent disruption to sustained closure or high‑risk passage, threatening a fifth of global oil and a major share of LNG flows.
Cyber attacks: Power grids, pipelines, and refineries in the wider region—and possibly beyond—could face cyber disruption.
In short: bombing Iran’s electricity system would almost certainly trigger more, not less, retaliation against Middle East oil and gas.
Impact on global oil and gas markets
With more attacks and higher risk:
Oil supply:
Middle East exports could be cut or delayed.
Insurance and shipping costs would rise.
Spot prices for crude would likely spike—potentially toward or above the $100 mark if Hormuz is seriously disrupted.
Gas and LNG:
Qatar and other Gulf LNG exporters would face higher risk.
LNG cargoes could be delayed, cancelled, or rerouted.
Europe and Asia would see sharper price volatility, especially for winter contracts.
Even if some supply is maintained, the risk premium alone would push prices higher.
How this would feed into global inflation
Energy is the backbone of prices everywhere. A sharp oil and gas shock would ripple through:
Fuel and transport: Higher petrol, diesel, and jet fuel costs raise the price of moving goods and people.
Electricity and heating: Gas‑linked power prices and heating costs rise, especially in LNG‑dependent countries like the UK and much of Europe.
Food: Fertiliser, farm fuel, processing, refrigeration, and transport all become more expensive.
Manufacturing and construction: Steel, cement, chemicals, plastics, and building materials see higher input costs.
Services: Retail, hospitality, logistics, and public services face higher energy bills, which feed into prices.
Central banks would be forced to weigh higher inflation against already fragile growth—potentially delaying interest‑rate cuts or even tightening again.
Who would be hit hardest
Energy‑dependent, import‑reliant economies: Europe, Japan, South Korea, and the UK, especially where gas sets electricity prices.
Countries with weak currencies and high debt: They’d struggle to pay for more expensive energy and could face balance‑of‑payments stress.
Rural and low‑income households: Those already stretched by heating, transport, and food costs would feel the pain first.
China’s current weak demand might temporarily soften the blow—but if its economy rebounds, competition for oil and LNG would intensify, pushing prices and inflation even higher.
The bigger picture
Ordering strikes on Iran’s electricity‑generation capacity wouldn’t just be a military move—it would be a global economic shock trigger:
Deep damage inside Iran
Escalated retaliation against Middle East energy infrastructure
Higher oil and gas prices
A new wave of inflation, just as many countries are trying to stabilise after previous crises