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Oil and gas prices surged on Thursday after major energy sites in the Middle East were attacked amid the regional war.
Brent, the benchmark for two thirds of the world's oil, touched $119 a barrel, although it eased slightly to trade 7.99 per cent higher at $112.77 a barrel at 5.05pm UAE time. West Texas Intermediate, the gauge that tracks US crude, was trading 0.09 per cent higher at $97.07 per barrel. Both benchmarks recorded a fourth consecutive weekly gain last week.
European gas prices also soared, touching their highest in more than three years on Thursday. Dutch front-month futures, which track European gas prices, touched €74 ($84.89) a megawatt-hour, its highest since January 2023. It was trading about 19.37 per cent higher at €65.250 a megawatt-hour at 5.05pm UAE time.
Crude and gas prices soared as Iran hit energy sites in the Gulf after an Israeli strike on its South Pars and Asaluyeh energy assets on Wednesday. Iran shares the giant South Pars gasfield with Qatar.
Qatar's Ministry of Defence on Thursday said that its Ras Laffan Industrial City, home to the world’s largest liquefied natural gas export plant, was attacked in a ballistic missile strike from Iran that resulted in “extensive damage”. The plant accounts for about 20 per cent of the global liquefied natural gas supply.
Meanwhile, the UAE also said on Wednesday that its Habshan gas plant and Bab field were the focus of an Iranian attack. The gas facilities have been shut down and no injuries have been reported, Abu Dhabi Media Office said.
“The war is escalating rather than showing signs of easing. And risks in oil prices remain tilted to the upside,” said Ipek Ozkardeskaya, senior analyst at Swissquote bank.
Oil prices have already risen about 50 per cent since the start of the war on February 28, as the Strait of Hormuz, the transit route for about a fifth of the world's oil, remains effectively shut.
“The risk of more lasting energy supply disruptions increases when moving from trade impasse around the Strait of Hormuz to production shut-ins and to infrastructure damage,” said Norbert Rucker, head of economics and next generation research at Julius Baer.
“The natural gas market showed some confidence over the past days that a temporary loss of Qatari supplies is digestible thanks to rising exports elsewhere and to power generation shifting to coal and renewables. This confidence might be tested in the coming days.”
US President Donald Trump said on Thursday the US was not aware of Israel’s plan to attack the South Pars gasfield, but criticised Iran's strike on Qatar.
“No more attacks will be made by Israel pertaining to this extremely important and valuable South Pars Field unless Iran unwisely decides to attack a very innocent, in this case, Qatar – in which instance the United States of America, with or without the help or consent of Israel, will massively blow up the entirety of the South Pars gasfield,” he said on Truth Social.
Earlier this week, Mr Trump had said the country could attack oil infrastructure on Iran’s main export centre, Kharg Island, after it hit military targets on the site.
Asaluyeh, which was hit by Israel, is a port city that serves as the onshore processing centre for the South Pars gasfield and is home to a dense cluster of petrochemical plants, refineries and export terminals. Details of the strike have not yet been determined, but any disruption in Asaluyeh would affect Iran's ability to process and export hydrocarbons from the field.
Iranian gas flows to Iraq were abruptly halted on Wednesday after the attack. The Iraqi Ministry of Electricity confirmed the disruption, warning of immediate effects on power generation nationwide. Ministry spokesman Ahmed Moussa said the suspension had already forced about 3,100 megawatts offline.
Tehran supplies between 30 per cent and 40 per cent of Iraq's electricity and gas needs.
