The Ras Laffan Industrial City, Qatar's principal site for production of liquefied natural gas and gas-to-liquid, in 2017. Iran has carried out a series of attacks on Gulf energy sites, including on the Ras Laffan LNG facility.KARIM JAAFAR/AFP/Getty Images
Energy prices were whipsawed after Iran intensified attacks Thursday on its Persian Gulf neighbours, targeting infrastructure for oil and liquefied natural gas – contributing to a volatile stock market session as investors weighed the impact of a drawn-out and increasingly destructive conflict.
Stocks and commodities fell while bond yields rose, in a trading session that reflected concerns that the Middle East conflict will continue to throttle energy exports, stoking fears of rising inflation and deteriorating economic activity.
The S&P 500 closed at 6,606.49, down 0.3 per cent, sinking it deeper into negative territory for 2026.
Since the United States and Israel attacked Iran at the end of February, the blue-chip index has fallen about 4 per cent and is now down about 5.7 per cent from its record high at the end of January.
Canadian stocks fared far worse on Thursday, as gold, silver and copper fell and pulled down commodity producers.
Canada, Japan, European allies willing to use ‘appropriate efforts’ to reopen Strait of Hormuz
The S&P/TSX Composite Index closed at 31,854.98, down 1.4 per cent. The benchmark is down about 8 per cent from its recent high.
While energy stocks have rallied with surging crude oil prices over the past two weeks, materials stocks – composed largely of base and precious metals producers – have slumped more than 14 per cent over the past five days alone.
Gold, normally a reliable haven when geopolitical tensions are taut, is coming off a record run-up earlier this year, which may be working against it now.
“Perhaps investors in the Middle East are selling gold to buy the U.S. dollar, which has strengthened during the war, even though both are considered safe havens. Rising bond yields might also explain gold’s recent meltdown,” Ed Yardeni, president and chief investment strategist at Yardeni Research, said in a note.
Gold fell 5.1 per cent, to US$4,644.80 an ounce.
U.S. may remove sanctions on Iranian oil stranded at sea, Bessent says
Bond yields have been rising with inflation expectations, based on concerns that soaring energy prices will feed into the broader economy and perhaps push central banks to raise interest rates, or at least delay further cuts.
The yield on the two-year U.S. Treasury note surged toward 4 per cent early Thursday, before backing off toward 3.8 per cent in the afternoon – further underscoring the seesawing outlook for both the war and the likely response from central banks.
Capital Economics is anticipating a severe but short war that will restrict energy exports through the Strait of Hormuz into the end of April, which should ease pressure on interest-rate expectations.
But the Britain-based forecaster cautioned that an escalation – involving significant damage to energy infrastructure – would continue to rattle expectations.
Iran said its assaults were in retaliation for Israel’s bombing of the massive South Pars natural gas field a day earlier.
Targets of the Islamic Republic’s strikes this week have included energy facilities in Saudi Arabia, Kuwait and Qatar.
Cargo ships sail in the Arabian Gulf toward the Strait of Hormuz in the United Arab Emirates on Thursday. The passageway remains effectively closed.Uncredited/The Associated Press
The world’s second-largest LNG exporter last year, Qatar halted its production in early March as the Strait of Hormuz was effectively closed to marine traffic.
Iran has launched multiple attacks on the Ras Laffan LNG hub in Qatar, inflicting heavy damage in a bombardment on Wednesday. LNG shipments from the United Arab Emirates also have been suspended.
“That’s a significant loss of supply in the market,” Meredith Freeman, senior editor at Poten & Partners, said during a webcast on Thursday.
Saudi Arabia said its SAMREF refinery in the Red Sea port city of Yanbu got hit. The kingdom had started to pump large amounts of oil west toward the Red Sea to avoid the Strait of Hormuz. Iran has also struck facilities in the United Arab Emirates. In Kuwait, two oil refineries were reported to be on fire.
International benchmark Brent crude oil surged close to US$119 a barrel early in the day.
It pared gains after U.S. Treasury Secretary Scott Bessent said Washington may remove sanctions from Iranian oil that is stranded on tankers to help lift global supplies and reduce prices. Brent crude is up more than 50 per cent since the war began on Feb. 28.
West Texas Intermediate gained about 2 per cent before surrendering gains in the afternoon, after U.S. President Donald Trump appeared to rule out the use of U.S. ground forces. The U.S. benchmark ended the day down about 1.5 per cent.
With no end in sight to the conflict, though, a growing number of analysts believe oil could hit a record US$200 a barrel.
The effective closing of the Strait of Hormuz remains the major issue roiling energy markets, and last week’s announcement by the International Energy Agency that members will release 400 million barrels of emergency stockpiles is seen as a temporary solution.
LNG markets rallied on Thursday. Factoring in the latest spikes, spot prices for Europe have doubled in March, while Asia-Pacific LNG benchmarks have soared 90 per cent.
“Missile attacks on Qatar’s Ras Laffan Industrial City have caused extensive damage, including fires,” analysts at Wood Mackenzie said Thursday. “This fundamentally alters the global gas market outlook.”
The analysts said initial expectations of a two-month disruption to LNG supplies are now likely to be exceeded.
The Shell PLC-led LNG Canada export terminal in Kitimat, B.C., began shipments to Asia last June and has been ramping up production since early 2026. LNG Canada is the first export terminal for the fuel in this country, which ranked 19th out of 24 LNG-exporting nations last year.
It takes roughly 10 days for a ship to sail from Kitimat to North Asia, compared with 20 days from the U.S. Gulf Coast via the Panama Canal.
“Canada’s strategic value rises because it’s Asia-facing, without Gulf transit or Panama Canal transit risk,” Ms. Freeman said.
Woodfibre LNG near Squamish and Cedar LNG in Kitimat are under construction in British Columbia. Woodfibre is scheduled for completion by late 2027 while Cedar is slated to be finished by late 2028.
With reports from the Associated Press and Reuters