Oil soars near $120 a barrel as the Iran war turns to energy sites
Attacks on Qatar's LNG hub and Saudi and Kuwaiti refineries push oil up 65% for the month and send European gas prices to 3-year highs
The PCK Schwedt oil refinery in Germany on Wednesday. Oil prices soared after attacks on some of the Middle East's most important energy facilities, raising concerns of a more severe impact from the almost three-week-old conflict. (Krisztian Bocsi/Bloomberg via Getty Images)
Brent crude climbed as high as $119 a barrel Thursday after Iran launched missile strikes on energy facilities across the Gulf region, marking a significant escalation in the war and raising fears of prolonged damage to global energy infrastructure.
By mid-morning in European trading, Brent was up roughly 10% at $118.50 and had gained 65% over the month. West Texas Intermediate was trading near $95 to $96 a barrel. European natural gas prices jumped 26%, with the Dutch TTF benchmark briefly touching 70 euros per megawatt-hour — the highest in more than three years, according to Reuters.
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The most consequential strike hit Ras Laffan, Qatar's industrial hub and the site of the planet's largest LNG export operations. QatarEnergy, the state-owned energy company, confirmed the damage in a statement, noting that a second Iranian strike had compounded harm from an attack on the same facility the day before. Saudi Arabia said it shot down four ballistic missiles that had been fired toward Riyadh and also reported thwarting a drone strike on a gas facility. SAMREF, a Saudi Aramco refinery in Yanbu where Exxon holds a stake, was struck from the air; loadings at the Red Sea port halted briefly before resuming. Kuwait Petroleum Corporation reported that a drone hit one of the operating units at its Mina al-Ahmadi refinery, starting a fire that was contained.
The attacks followed Israel's strike on Iran's South Pars gas field — the Iranian half of the world's largest natural gas deposit, which Iran shares with Qatar. President Donald Trump said late Wednesday that Israel would not strike South Pars again, but warned that the U.S. would "blow up the entirety" of the field if Iran attacked Qatar.
Analysts said the damage to Ras Laffan has shifted how traders think about the duration of the supply disruption. "Troubles for global gas markets aren't just about when flows through the Strait of Hormuz resume, but how long repair work at the sites might take," analysts at ING said, according to The Wall Street Journal. Production at the damaged facilities could be offline for months.
If Iran were to strike all the facilities it has threatened, Rystad Energy estimated the global market could lose at least 700,000 barrels a day of refining output, with diesel, jet fuel, and naphtha particularly exposed, according to The Journal. Rystad projected that prolonged strikes on energy assets would drive crude substantially above $120 a barrel; a hit on a major facility such as Yanbu could push prices past $150.
The Strait of Hormuz remains effectively closed, and the Trump administration has taken steps to cushion domestic fuel prices, including a Jones Act waiver and a draw from the Strategic Petroleum Reserve.