EU gas outlook darkens as Hormuz stalls, chip sell-off spreads
An Iranian missile attack on US forces has halted tanker traffic through the Strait of Hormuz, threatening European winter gas supplies just as a global sell-off in semiconductor stocks batters the continent's tech sector.
Brent crude surged 3.8% to $87.26 a barrel after the US military said it intercepted an Iranian ballistic missile barrage targeting a base in Jordan. The escalation has effectively halted tanker traffic through the Strait of Hormuz, disrupting global energy flows and sending shockwaves through European commodity markets.
The European gas market looks "increasingly vulnerable as we head into winter", according to ING analysts Warren Patterson and Ewa Manthey. QatarEnergy has extended force majeure for buyers in Asia and Europe to the end of September, leaving EU LNG imports on track to fall more than 25% year-on-year in July.
Storage levels are currently at just 56% capacity, well below the 10-year seasonal average of 72%. Heatwaves across the continent are compounding the difficulty of refilling reserves, raising the risk of prolonged price spikes during the heating season.
Iran rejected an Omani proposal to split inbound and outbound shipping lanes through the Strait, insisting on oversight of all vessels. ING warned the situation throws "cold water on the idea of a swift de-escalation in the Persian Gulf", noting reports that the 400,000 barrel-a-day Jazan refinery in Saudi Arabia also shut following Houthi attacks.
Tech slump ripples into Europe
While energy prices rose, European technology stocks suffered from a continued global sell-off in chipmakers driven by nervousness over artificial intelligence spending. Infineon Technologies and ASML both fell around 1%, tracking heavy overnight losses in Asia and the US.
The South Korean market dropped 8.3% after SK Hynix reported a six-fold surge in quarterly profit but still saw its shares slump 9%. Matt Britzman, an analyst at Hargreaves Lansdown, noted the company "could hardly have picked a tougher moment for its Nasdaq debut" as investors grapple with questions about hyperscale spending.
Britzman argued that "the sell-off across memory stocks looks more like a sentiment reset than a change in the earnings story." He added that while "the bull case remains intact, but the low-hanging fruit of constant upgrades is behind us."
Miners offset broader market drag
The Stoxx Europe 600 managed to climb 0.3%, supported by a 1.9% jump in basic materials. Miners like Rio Tinto and Glencore benefited from robust copper prices, which have been lifted by AI-driven demand for data centre building materials.
Rio Tinto reported a 43% jump in profit to $6.9bn, sending its shares up 2%. Glencore rose 4% after reporting a 15% increase in copper production and guiding for marketing unit earnings of around $3.3bn.
Elsewhere, Reckitt Benckiser beat sales expectations but saw operating profit drop 14.3% to £1.47bn. The consumer goods group noted that moderated oil prices mean it expects a "reduced input cost impact in 2026". These corporate updates arrive ahead of a Federal Reserve interest rate decision later today, where Deutsche Bank notes a 32% chance of a hike is priced in, creating a highly volatile backdrop.
