At the opening of this morning’s trading session, Brent crude oil prices are currently up 4% to $111.8 per barrel. U.S. crude oil WTI is up 2.8% to $99.6.
The market accelerated from the previous session after Iran attacked several energy facilities across the Middle East. Earlier, its South Pars gas field was also bombed, marking a significant escalation in the conflict with the U.S. and Israel.
Qatar’s national oil company announced on March 18 that the Ras Laffan industrial zone – the center of the country’s energy sector – has suffered “heavy damage” after being hit by Iranian missiles. Saudi Arabia also reported that it intercepted and destroyed several ballistic missiles aimed at Riyadh, while preventing a drone attack on gas facilities in the eastern part of the country.
Iran had previously issued evacuation warnings to several energy facilities in Saudi Arabia, the UAE, and Qatar on March 18. They stated that these targets would be attacked “in the coming hours,” according to Iranian state media. This warning came after their South Pars gas field was attacked.
“The attacks on the South Pars field have driven up oil and gas prices. The escalation of attacks on energy infrastructure will continue to push prices higher,” said Ole Hvalbye, an analyst at SEB.
The conflict has nearly halted shipping through the Strait of Hormuz for almost three weeks. This maritime route carries about 20% of the world’s oil and LNG supply. Oil production in the Middle East is estimated to have decreased by 7-10 million barrels per day, equivalent to 7-10% of global demand.
The administration of U.S. President Donald Trump announced on March 18 that it would temporarily lift regulations under the Jones Act for 60 days. This is to allow foreign-flagged ships to temporarily transport fuel, fertilizers, and goods between U.S. ports.
The U.S. government also temporarily relaxed regulations on summer-blend gasoline to reduce pollution, according to sources from Reuters. However, these measures only have a limited impact on gasoline prices. Traders and analysts also believe that these actions may help cool fuel prices in the U.S., but are unlikely to significantly affect global energy prices.