Attacks on energy infrastructure in Iran, Saudi Arabia, Kuwait, Qatar, and the UAE have led to a sharp increase in US road fuel prices. March 19 - The conflict initiated by the United States and Israel against Iran, along with Tehran's retaliatory strikes on its Gulf neighbors, has damaged critical energy facilities, bringing shipping traffic through the Strait of Hormuz to a near standstill. This vital waterway handles approximately 20% of the world's oil and liquefied natural gas (LNG) shipments. Tensions escalated further this Wednesday when Israel targeted Iran's South Pars gas field, prompting Tehran to launch attacks on regional energy infrastructure. Concurrently, daily oil exports from the region have dropped by at least 60% compared to pre-conflict levels. The following are the major energy disruptions reported so far:
Iran - On March 18, parts of Iran's South Pars gas field and the Asaluyeh processing center were attacked. The extent of the damage remains unclear, according to Iranian state media. - Iran has halted natural gas supplies to Iraq after diverting gas for domestic use, a senior Iraqi official told Reuters. - Israel had previously attacked fuel depots across mainland Iran, while US forces struck military targets near Iran's primary oil export terminal on Kharg Island.
Saudi Arabia - On March 19, a drone attack hit the SAMREF refinery, which is owned by Aramco and Exxon. Saudi Arabia's Defense Ministry stated that damage assessment at the refinery is ongoing. - Saudi Arabia, the world's largest oil exporter, has reduced its oil output by approximately 2 million barrels per day (bpd) to about 8 million bpd following production cuts at two offshore oil fields. - Operations have been suspended at the Ras Tanura refinery, which has a capacity of 550,000 bpd, and some crude exports have been rerouted to the Red Sea. - Saudi air defenses intercepted a ballistic missile aimed at Yanbu, the country's sole remaining crude export terminal. Loading operations there were briefly halted.
Kuwait - On March 19, drone strikes targeted units at the Mina al-Ahmadi and Mina Abdullah refineries operated by Kuwait Petroleum Corporation, causing fires at both facilities. - Kuwait has reduced oil production and declared force majeure.
Qatar - Earlier on March 19, missile attacks damaged several LNG facilities operated by QatarEnergy, affecting about 17% of its export capacity. - Shell announced that its Pearl gas-to-liquids plant in Ras Laffan has halted production following damage. - Qatar had already suspended LNG operations on March 2 and declared force majeure on LNG shipments on March 4, disrupting supply equivalent to roughly 20% of global LNG trade.
United Arab Emirates - The Habshan gas processing plant, one of the world's largest with a capacity of 6.1 billion standard cubic feet per day, was shut down on March 19 after an incident triggered by intercepted missile debris. - The Bab oil field has also been targeted. - The UAE, OPEC's third-largest producer, has seen its oil output cut by more than half. ADNOC has closed the Ruwais refinery, which has a capacity of 922,000 bpd, and the Fujairah export terminal has been attacked multiple times. - TotalEnergies reported on March 12 a 15% loss in its Middle East upstream production, including offshore operations in the UAE.
Iraq - Iraq, OPEC's second-largest producer, has reduced output from its main southern oil fields by 70%, from 4.3 million bpd to approximately 1.3 million bpd. - Baghdad reached an agreement on Tuesday to resume crude oil exports from the northern Kirkuk field to Turkey via pipeline.
Bahrain - Bapco Energies declared force majeure on March 9 following an attack on its Sitra refinery, which has a capacity of 380,000 bpd.
Shipping - Shipping through the Strait of Hormuz has nearly halted since Iran announced its closure on March 2 and warned it would fire on vessels attempting passage. - More than ten ships have been attacked since the conflict began, although some vessels carrying fuel to India and Pakistan have been permitted to pass. - The US Navy has declined industry requests to escort tankers, despite previous statements from former President Trump suggesting such support. - Major marine insurers are canceling war risk coverage for vessels operating in Iranian, Gulf, and adjacent waters. - Some ships are facing difficulties refueling at Asian ports due to soaring marine fuel costs.
Impact on Consumers - Benchmark crude prices for Middle Eastern oil have surged to record highs. - US diesel prices have surpassed $5 per gallon, only the second time on record, while gasoline prices have climbed above $3.70 per gallon, reaching their highest level since October 2023. - Refineries in Asia, including Japan, have reduced output or declared force majeure due to shortages of feedstocks like naphtha. - India has urged consumers to conserve energy and avoid panic buying. - South Korea has imposed a domestic fuel price cap for the first time in 30 years and restricted naphtha exports. - The International Energy Agency has recommended a release of 400 million barrels of oil from global reserves, the largest such action in its history. - Washington has temporarily eased sanctions on Russian crude oil.
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