Oil Jumps 5% as Attacks on Energy Facilities Escalate

SadaNews - Oil prices rose following attacks on some of the most important energy facilities in the Middle East, raising fears of a more severe impact from the ongoing conflict, which has lasted for nearly three weeks.

Brent crude climbed by as much as 5.1%, nearing $113 per barrel, while the most active contract for West Texas Intermediate settled around $96. U.S. natural gas also surged by 6.5%.

Iran conducted attacks on a major liquefied natural gas site in Qatar, one of several energy asset sites it threatened to target, following Israeli strikes on its massive South Pars field.

Oil has risen by about 50% since the outbreak of war that has caused chaos in the Middle East, as shipping through the Strait of Hormuz has been choked off and significant portions of oil and gas production have been reduced.

However, the Iranian energy sector has largely remained unscathed so far, which has helped contain the potential for escalation that could have a more significant impact on long-term supplies.

Escalation Risks Could Push Prices to Record Levels

Haris Khurshid, an investment manager at Karobar Capital in Chicago, said, "The market is still downplaying the risks and not fully pricing them, especially how quickly this escalation could turn into broader direct strikes on the region's energy infrastructure."

He added, "If this develops into direct strikes, a level of $120 would not be a ceiling, but a starting point, and hitting $140 to $160 would not be far-fetched at all," referring to Brent prices.

U.S. President Donald Trump stated that the United States was unaware of the Israeli strike on the South Pars field but threatened to "blow up the field completely" using U.S. forces if Qatari assets were hit again.

Earlier this week, he added that targeting the oil infrastructure in Iran's main export hub on Kharg Island remains an option after military targets there were bombed.

Will Todman, a senior fellow at the Middle East Program at the Center for Strategic and International Studies, said, "Pressure on the Strait of Hormuz means that Trump cannot simply declare victory and withdraw, as that would not solve the underlying problem."

He added, "Many of the options Trump has to increase pressure on Iran would push energy prices higher, including trying to take control of Kharg Island or targeting Iranian energy production facilities."

Extensive Damage to Gas Facilities

Local authorities reported that the city of Ras Laffan in Qatar, home to the world's largest liquefied natural gas export facility, suffered "extensive damage" from a missile strike, and a subsequent attack caused a fire.

The South Pars field is crucial for supplies to the local market as well as to neighboring Iraq and Turkey, with oil and petrochemical assets associated with it also being targeted in the Assaluyeh area within Iran.

Tom Marzec-Manser, European gas and LNG director at Wood Mackenzie, stated, "The attack on Ras Laffan is exactly what the LNG market feared, following the strikes targeting South Pars in Iran earlier today."

He added, "It is not yet clear which part of the industrial complex was damaged, but in any case, it will support gas prices when the market opens on Thursday."

Separately, Abu Dhabi announced that it suspended operations at its Habshan gas facilities after intercepting missiles that resulted in debris falling. Bahrain denied a report by the semi-official Iranian news agency Fars stating that a liquefied natural gas refinery had been struck.

Potential U.S. Policies to Curb Prices

RBC Capital Markets stated that the United States may consider imposing tariffs on crude oil exports or even banning them to counter rising energy prices resulting from the war, which has contributed to widening the gap between West Texas Intermediate and global Brent crude. The spread has grown to a discount of over $12 per barrel.

As part of efforts to combat rising prices, Trump temporarily suspended a century-old maritime law known as the Jones Act to reduce the transportation costs of oil, gas, and other goods within the United States.

At the same time, Vice President JD Vance and other key officials in the Trump administration plan to meet with senior executives in the oil sector on Thursday.