Oil prices soar near $120 a barrel as Iran war hits key energy sites
Brent crude soared as high as $119 a barrel on Thursday after Iran launched missile strikes on energy facilities in the Gulf region, marking a significant escalation in the war and raising fears of prolonged damage to global energy infrastructure.
In mid-morning European trading, Brent was up about 10% at $118.50 and had gained 65% for the month. West Texas Intermediate was trading between $95 and $96 per barrel. Natural gas prices in Europe jumped 26%, with the Dutch benchmark TTF briefly reaching 70 euros per megawatt hour – the highest in more than three years, according to Reuters.
The most serious strike hit Ras Laffan, the industrial center of Qatar and the site of the largest LNG export operations on the planet. QatarEnergy, the state-owned energy company, confirmed the damage in a statement, noting that a second Iranian strike had compounded the damage caused by an attack on the same facility the day before. Saudi Arabia said it shot down four ballistic missiles fired toward Riyadh and also said it foiled a drone strike on a gas facility. SAMREF, a Saudi Aramco refinery in Yanbu in which Exxon has a stake, was struck from the air; loadings at the Red Sea port briefly stopped before resuming. The Kuwait Petroleum Corporation reported that a drone hit one of the operational units at its Mina al-Ahmadi refinery, sparking a fire that was brought under control.
The attacks follow the Israeli strike on Iran’s South Pars gas field – the Iranian half of the world’s largest natural gas field, which Iran shares with Qatar. President Donald Trump said Wednesday evening that Israel would no longer strike South Pars, but warned that the United States would “blow up the entire field” if Iran attacked Qatar.
Analysts said the damage at Ras Laffan has changed how traders view the duration of the supply disruption. “The problems in global gas markets are not only about the resumption of flows through the Strait of Hormuz, but also the duration of repair work at the sites,” ING analysts said, according to the Wall Street Journal. Production at damaged facilities could be disrupted for months.
If Iran were to strike every facility it threatens, Rystad Energy estimates the global market could lose at least 700,000 barrels per day of refinery production, with diesel, jet fuel and naphtha particularly exposed, according to the Journal. Rystad predicted that prolonged strikes on energy assets would propel crude well above $120 a barrel; an impact on a major facility like Yanbu could push prices beyond $150.
