International oil prices climbed following reciprocal attacks by Iran and Israel on critical energy infrastructure in the Middle East. The nearly three-week-long conflict has further unsettled market sentiment. During early trading on Thursday, the front-month WTI crude contract rose by as much as 3.4%, reaching $98.69 per barrel. Brent crude settled near $107 on Wednesday, while the European benchmark natural gas price surged by 6%.
Iran launched an assault on a major liquefied natural gas facility in Qatar—one of several energy targets Tehran vowed to strike after its South Pars gas field was attacked. Since the outbreak of this round of hostilities, oil prices have surged by approximately 50%. The conflict has triggered instability across the Middle East, with shipping through the Strait of Hormuz disrupted and numerous oil and gas production sites damaged.
However, Iran's upstream energy sector had previously remained largely unaffected, which somewhat contained the risk of an escalation that could have a more significant long-term impact on supplies. It was reported that the U.S. President was aware in advance of Israel's strike on the South Pars gas field but desired no further attacks on Iranian energy infrastructure. Earlier this week, he indicated that targeting oil infrastructure at Iran's key export hub, Kharg Island, remained under consideration following strikes on Iranian military targets.
"Tensions in the Strait of Hormuz mean the President cannot simply declare victory and disengage, as that would not resolve the underlying issue," said a senior fellow with the Middle East Program at a Washington-based think tank. "Many of the pressure options against Iran would drive energy prices higher, including attempts to seize Kharg Island or strike Iranian energy production infrastructure."
Qatari authorities stated that the Ras Laffan Industrial City—home to the world's largest LNG export plant—suffered significant damage following a missile attack. The site was among potential regional energy targets previously listed by Iran in retaliation for the strike on the South Pars gas field and related facilities. The South Pars field is crucial for supplying Iran's domestic market as well as neighboring Iraq and Turkey.
Related oil and petrochemical assets in Iran's Asaluyeh were also hit. The United Arab Emirates announced that its Habshan gas facility had suspended operations due to falling debris from intercepted missiles. According to a semi-official Iranian media report on Wednesday, LNG assets in Bahrain—which Tehran considers U.S. interests—were heavily struck by missiles, although the report did not cite a source.
Concurrently, the President temporarily waived century-old shipping regulations under the Jones Act to reduce transportation costs for oil, natural gas, and other commodities within the United States. This is the latest measure taken to curb the trend of rising energy prices following the outbreak of war with Iran. In a further effort to control escalating fuel costs, the Vice President and other key administration officials plan to meet with oil industry executives on Thursday.
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