Oil surges as Iran strikes Gulf energy assets

Iran and Israel have exchanged attacks on energy infrastructure across the Middle East, pushing the war into its third week and directly targeting critical oil and gas facilities. Iran warned that energy sites in Gulf countries would be treated as legitimate targets after Israel struck Iran’s South Pars gas field.

A senior Israeli official said Israel carried out the strike on South Pars, with the United States aware of the operation but not participating, according to people familiar with the matter. South Pars is the Iranian sector of the world’s largest natural gas deposit, which Iran shares with Qatar.

In response, Iranian President Masoud Pezeshkian said attacks on Iran’s energy infrastructure would “yield nothing” for the US, Israel and their supporters, warning that the situation could have “uncontrollable consequences” whose scope could engulf the world.

QatarEnergy reported that Iranian missile attacks on Ras Laffan Industrial City, home to the world’s largest liquefied natural gas export plant and Qatar’s core LNG processing operations, caused “extensive damage.” One missile struck after four were intercepted late Wednesday, and another attack early Thursday triggered a fire.

Qatar’s Foreign Ministry condemned the assault as “a dangerous escalation” and “a flagrant violation of state sovereignty.” The strikes have raised concerns about disruptions to LNG supplies from one of the world’s most important export hubs.

In the United Arab Emirates, authorities shut some energy operations following incidents at the Habshan gas facilities and the Bab oil field, which were affected by falling debris from intercepted missiles. Saudi Arabia said it intercepted and destroyed four ballistic missiles aimed at Riyadh and foiled a drone attack on a gas facility.

Iran had issued evacuation warnings ahead of its attacks for several oil facilities across Saudi Arabia, the UAE and Qatar as it prepared retaliation for the strikes on its South Pars and Asaluyeh energy infrastructure. Iran also halted gas supplies to Iraq, which reported a loss of power generation.

Brent crude (UKOIL) prices rose sharply to around $107.38 a barrel and have climbed about 50% since the start of the conflict, which has choked off the Strait of Hormuz to shipping and cut regional oil and gas production. In early Thursday trading, Brent futures (UKOIL) were up 3.44% at $111.07 and U.S. West Texas Intermediate (USOIL) was at $98.61.

U.S. crude climbed more than 3% to $99.39 per barrel, while natural gas prices rose over 5%. Renewed attacks on Middle Eastern energy facilities have given greater support to Brent, with WTI (USOIL) trading at its widest discount to Brent in 11 years due to U.S. strategic reserve releases and higher freight costs.

Market participants cited deepening regional tensions, continuing attacks and no sign of a near-term reopening of the Strait of Hormuz as factors likely to keep oil prices supported. The conflict is now directly affecting what one strategist described as the “plumbing of the global energy system.”

The escalation has complicated U.S. efforts to curb rising energy prices. President Donald Trump temporarily waived a century-old U.S. shipping mandate to lower the cost of transporting energy goods domestically, and Vice President JD Vance and other officials plan to meet oil executives.

Trump has expressed frustration with countries that have declined his calls to help secure the Strait of Hormuz, which remains largely impassable for shipping. Reuters reported the administration is considering deploying thousands of U.S. troops to reinforce its Middle East operations.

Options under consideration include providing safe passage for oil tankers through the Strait of Hormuz using primarily air and naval forces, though securing the waterway could also require additional U.S. troop deployments, according to sources cited in the report.

The escalation in the U.S. and Israel’s war with Iran has rattled global financial markets. Japan’s Nikkei (NKY) and South Korean equities both fell 2.5%, while MSCI’s index of Asia-Pacific shares outside Japan slipped more than 1%. European futures were down more than 1.5%.

The U.S. dollar index (DXY) has gained about 2.5% since the war broke out at the end of February, as investors have gravitated toward the greenback as a haven. It was last around 100.11–100.16, near a four-month high, with traders scaling back expectations for U.S. rate cuts.

The yen traded around 159.7 per dollar, hovering near a two-year low, as markets awaited a Bank of Japan decision. Japanese Finance Minister Satsuki Katayama said authorities are on heightened alert for currency volatility and prepared to act against sharp moves.

The Federal Reserve kept interest rates on hold and projected only one rate cut this year, citing higher inflation and steady unemployment. Fed Chair Jerome Powell noted unusually high uncertainty as policymakers assess the impact of the U.S.-Israeli strikes on Iran and surging energy prices.