Oil prices jumped by over 5 percent after an Israeli attack on Iran’s South Pars gas field, as tensions between the United States, Israel, and Iran continue to intensify.
Brent crude, the global benchmark, increased by 5 percent to reach $108.66 per barrel on Wednesday. Meanwhile, US West Texas Intermediate (WTI) crude rose by 2.5 percent to $98.65 per barrel, widening the price gap between the two to its largest level since May 2019 amid concerns that the conflict could drag on.
According to Iranian state media, gas facilities linked to the offshore South Pars field the world’s largest gas reserve located off Iran’s Bushehr coast were targeted in the strike.
Following the attack, Iran’s Revolutionary Guard issued threats to target oil and gas infrastructure in Qatar, Saudi Arabia, and the United Arab Emirates, raising fears of further disruptions to regional energy supply.
Later that same day, authorities in Qatar confirmed a fire outbreak at the Ras Laffan gas facility after it was hit by an Iranian ballistic missile. Officials later stated that the situation had been brought under control.
The ongoing US-Israeli conflict with Iran, along with retaliatory strikes on Gulf nations, has already disrupted oil and natural gas exports from the Middle East, forcing some production activities to halt.
Analysts warn that if these supply disruptions persist, prolonged high oil and gas prices could trigger a fresh wave of global inflation.
Clashes have also significantly reduced shipments through the Strait of Hormuz a key route responsible for about 20 percent of the world’s oil and liquefied natural gas flows. Total production losses in the Middle East are estimated at between 7 million and 10 million barrels per day, representing roughly 7 to 10 percent of global demand.
In response to the situation, the Trump administration announced a 60-day suspension of the Jones Act, allowing foreign vessels to transport fuel, fertiliser, and other goods between US ports.
Additionally, the US Treasury issued a general licence permitting certain transactions involving Venezuela’s state-owned oil company, PDVSA.
In Iraq, sources from the North Oil Company reported that exports have resumed via pipeline after Baghdad reached an agreement with the Kurdistan Regional Government to restart flows.
Two oil officials also indicated last week that Iraq is aiming to export at least 100,000 barrels per day through its ports.