The U.S.-Israeli military campaign against Iran struck the South Pars gas field on Wednesday, March 18, one of the world’s largest natural gas reserves, sending global oil prices surging. Tehran retaliated within hours, launching ballistic missiles at a Qatari natural gas facility and firing on Saudi Arabia, then publishing a list of Gulf energy targets it threatened to destroy. The Strait of Hormuz, through which roughly 20 percent of the world’s oil and LNG shipments pass, is now largely shut down.
The South Pars gas field, located offshore in Iran’s southern Bushehr province, came under attack on Wednesday as the U.S.-Israeli military campaign against Iran continued to intensify. Iranian state media confirmed the strike. South Pars is among the largest natural gas reserves on Earth, and its output supplies a significant share of both Iranian domestic energy and global gas markets.
Oil markets reacted immediately. Brent crude, the international benchmark, jumped 5 percent to $108.66 per barrel. U.S. West Texas Intermediate crude climbed 2.5 percent to $98.65 per barrel, according to Al Jazeera. The spread between WTI and Brent widened to its largest gap since May 2019, reflecting traders’ assessment that this conflict could grind on for months.
Iran’s Islamic Revolutionary Guard Corps struck back on Wednesday night, launching ballistic missiles at Qatar’s Ras Laffan natural gas facility and sparking a fire at one of the most important energy hubs in the world.
Qatar’s Foreign Ministry condemned the attack, calling it a flagrant violation of national sovereignty and a direct threat to regional security. Doha said it reserves the right to respond.
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QatarEnergy, the world’s largest liquefied natural gas producer, confirmed that missiles hit the facility, causing fire and significant damage. All personnel were accounted for, and the company reported no casualties. QatarEnergy operates 14 production lines with a combined annual capacity of 77 million tons of LNG.
Saudi Arabia reported separately on Wednesday that its forces intercepted and destroyed four ballistic missiles aimed at the capital, Riyadh, and foiled a drone attack targeting natural gas infrastructure in the kingdom’s eastern region, according to Reuters.
Tehran publishes a hit list of Gulf oil and gas targets
Iran escalated further by releasing a list of what it called direct and legitimate targets across the Persian Gulf. The list named Saudi Arabia’s Samref Refinery and the Jubail Petrochemical Complex, the United Arab Emirates’ Al Hosn Gas Field, and Qatar’s Mesaieed petrochemical facilities and the Ras Laffan refinery. Tehran warned that personnel at all listed sites should evacuate immediately, threatening strikes within hours.
The threat brought the Islamic Revolutionary Guard Corps’ campaign of retaliation to its most explicit and dangerous point yet, raising the prospect of a regionwide energy war.
The combined force of U.S.-Israeli strikes on Iran and Iranian retaliatory attacks on Gulf states has already disrupted Middle Eastern oil and natural gas exports. Some production facilities have been forced to shut down entirely.
The fighting has severely disrupted shipping through the Strait of Hormuz. This waterway carries roughly 20 percent of the world’s oil and liquefied natural gas; most traffic through the strait has now been halted.
Market estimates put lost Middle Eastern oil production at between 7 million and 10 million barrels per day. That figure represents seven percent to 10 percent of total global demand, a supply shock large enough to trigger sustained price increases worldwide. Analysts warned that if the conflict continues, the global economy faces a new round of inflationary pressure.
Trump administration waives the Jones Act and eases Venezuela oil sanctions
To relieve pressure on energy supply, the Trump administration announced several emergency measures on Wednesday. The White House issued a 60-day waiver of the Jones Act, the longstanding law requiring goods shipped between U.S. ports to travel on American-flagged vessels. The waiver allows foreign-flagged ships to transport fuel, fertilizer, and other goods domestically, expanding logistics capacity during the crisis.
The U.S. Treasury Department also issued a general license authorizing certain transactions involving Venezuela’s state oil company, PDVSA, opening a new channel for alternative crude supply.
In Iraq, the region’s other major oil producer, exports through a northern pipeline resumed on Tuesday after Baghdad and the Kurdistan Regional Government reached an agreement, according to sources at the North Oil Company.
Two Iraqi oil officials said last week that the country plans to export at least 100,000 barrels per day through relevant port facilities to help fill the gap left by the disruption of Gulf energy flows.
By Gao Yun
