Oil prices soared after Iranian missile strikes on Qatar's main energy hub
Kyiv • UNN
Iran attacked the world's largest LNG plant in Ras Laffan, causing Brent to rise to $112. Experts warn of a global supply shock.
Oil prices continued to rise on Thursday, as the situation in the Middle East remains tense, and attacks on energy infrastructure in the region fuel fears of supply shortages, UNN reports with reference to CNBC.
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On Wednesday, Qatar said that Iranian missile strikes damaged a key liquefied natural gas export facility.
This came after Tehran warned of attacks on energy facilities in Qatar, Saudi Arabia, and the United Arab Emirates after Israel bombed a gas processing plant in Iran.
Brent crude futures for May delivery rose 4.5% to $112.19 as of 1:10 ET (7:10 Kyiv time), while US West Texas Intermediate crude futures for April delivery rose more than 1% to $97.32.
According to CNN, Qatar's main energy hub, the industrial city of Ras Laffan, suffered significant damage after two missile strikes from Iran within 12 hours, according to the state-owned company QatarEnergy.
Ras Laffan, an industrial hub about 80 kilometers north of Doha, is the backbone of the Gulf state's economy and the world's largest gas liquefaction plant, according to the International Energy Agency.
Qatar's Ministry of Defense reported early Thursday that Ras Laffan had been hit by a second missile attack, which resulted in "significant fires and additional damage," according to QatarEnergy. According to the Ministry of Interior, Qatar's rescue service is dealing with the aftermath of the fire. According to QatarEnergy, Ras Laffan had already sustained "significant damage" from another strike on Wednesday. There were no casualties in either attack.
Qatar's Ministry of Foreign Affairs condemned the attack as a "dangerous escalation" and a "flagrant violation of sovereignty," warning that it threatens national security and regional stability. The ministry added that Qatar reserves the right to respond in accordance with international law.
Saudi Arabia and the United Arab Emirates were put on high alert after Israel struck an Iranian gas processing plant.
Qatar had already halted LNG production on March 2 after Iranian drone attacks on Ras Laffan and the industrial city of Mesaieed. According to Kpler, the country is the world's second-largest LNG exporter after the US, accounting for almost a fifth of global supplies.
Increased attacks on Middle Eastern energy infrastructure risk exacerbating the supply shock caused by the war with Iran. Tanker traffic through the Strait of Hormuz, through which about 20% of the world's oil supplies passed, has been largely blocked.
Gulf Oil senior energy advisor Tom Kloza warned that markets could enter an "all bets are off" scenario if the conflict extends beyond the Persian Gulf and attacks on energy infrastructure begin in other regions, such as Europe or the United States.
"Can you imagine the world's reaction if [Iran] targets something outside the Persian Gulf, such as a refinery in Rotterdam or a facility somewhere in the United States? That's when all bets will be off, and prices could skyrocket to apocalyptic heights," he said.
Such a shift would mark a transition from localized geopolitical risk to a global supply shock, where traditional pricing models and risk assumptions would no longer apply, the publication writes. In such a situation, fears of large-scale disruptions in fuel processing and distribution could cause extreme volatility, with oil and gas prices soaring as traders factor in worst-case scenarios and rush to secure supplies.
"We're going from a supply chain problem to a potential supply problem. That's a big difference. Supply chain problems are resolved quickly," said Dan Pickering, founder and chief investment officer of Pickering Energy Partners.
"If you start changing production capabilities, whether it's LNG or oil, and suddenly you can't move the same volumes because the volumes aren't there... That's an escalation," he pointed out.