Oil Prices Surge as Iran Attacks Middle East Energy Facilities
Oil prices climbed sharply on Thursday after Iran launched attacks on key energy facilities across the Middle East. The escalation followed a strike on the South Pars gas field, marking a significant intensification in the ongoing conflict involving the United States and Israel.
Brent crude futures surged by as much as $5 per barrel during early trading. By 04:00 GMT, Brent was up $4.66, or 4.3%, at $112.04 per barrel, after briefly hitting $112.86. Meanwhile, U.S. West Texas Intermediate (WTI) crude rose 96 cents, or 1%, to $97.28 per barrel, after earlier gaining more than $3.
Brent Outperforms as Supply Risks Intensify
Brent crude had already closed 3.8% higher in the previous session, while WTI remained largely unchanged. The price gap between the two benchmarks has widened to its largest level in over a decade.
This divergence is driven by continued releases from U.S. strategic petroleum reserves and rising transportation costs, which have weighed on WTI. At the same time, renewed attacks on Middle Eastern energy infrastructure have provided strong support for Brent prices.
Market analysts warn that the situation could lead to prolonged supply disruptions. According to Priyanka Sachdeva, an analyst at Phillip Nova, escalating tensions, targeted strikes on oil infrastructure, and political instability in Iran all point to sustained pressure on global oil supply.
Geopolitical Tensions and Fed Policy Add to Market Uncertainty
The geopolitical backdrop is further complicated by monetary policy concerns. The U.S. Federal Reserve kept interest rates unchanged but signaled a hawkish stance, warning that inflation could rise due to higher energy prices linked to the conflict.
This combination of war-driven supply risks and tighter monetary conditions is adding to uncertainty in global markets and supporting oil prices.
Energy Infrastructure Attacks Across the Gulf Region
The conflict has spread across major energy hubs in the Gulf. QatarEnergy reported extensive damage at Ras Laffan, a critical LNG processing site, following Iranian missile strikes.
Saudi Arabia confirmed that it intercepted multiple ballistic missiles targeting Riyadh, along with a drone attack aimed at a gas facility.
Iran had issued evacuation warnings ahead of its strikes targeting oil infrastructure in Saudi Arabia, the United Arab Emirates, and Qatar. These actions were in retaliation for earlier attacks on its own facilities in South Pars and Asaluyeh.
South Pars, the world’s largest natural gas field, is jointly shared by Iran and Qatar, making it a strategically critical energy asset.
Outlook: Oil Prices Supported Amid Ongoing Conflict
Oil markets are expected to remain supported as tensions continue to escalate, with no clear signs of de-escalation. Concerns are also growing over the security of the Strait of Hormuz, a key global oil shipping route.
Analysts suggest that prolonged instability in the region could keep supply risks elevated and prices volatile in the near term.
Reports also indicate that the United States is considering deploying additional troops to the Middle East, with potential plans to secure oil tanker routes through the Strait of Hormuz using naval and air forces.
