Oil and gas prices rose again on Tuesday after Iran carried out attacks on production facilities for the first time since the start of the war with the US and Israel.
Brent crude, the international benchmark oil price, climbed 2.3% to almost $103 (£77) a barrel and was up nearly 50% from levels before the war began on 28 February. Wholesale gas prices rose nearly 3% to €52 (£45) a megawatt hour, compared with about €30 before the war.
For the first time, Iran successfully targeted oil and gas production facilities rather than just refineries, terminals and storage.
The United Arab Emirates said a drone struck the Shah natural gasfield – one of the largest in the world – on Monday and set it on fire. Operations remained suspended on Tuesday while officials assessed the damage.
An oilfield in Iraq, Majnoon, and the UAE’s biggest port and oil storage facility, Fujairah, were also hit by Iranian drones and missiles as the war entered its third week.
Oil prices
A tanker was hit by an unknown projectile off the port of Fujairah in the Gulf of Oman. The attack caused a fire in the port, a vital export terminal where oil loading by the state company Adnoc has been halted. When operating normally, Fujairah is the outlet for more than 1m barrels of oil a day.
The disruptions threaten to completely cut off the UAE’s remaining crude export outlet from global markets as the Middle East crisis deepens. Daily crude oil output from the UAE, the third biggest producer within the Opec cartel, has more than halved since the conflict started.
Energy infrastructure chart
The UAE’s other export hubs are located within the Gulf, which has in effect been cut off from the world by Iran’s stranglehold of the strait of Hormuz, a narrow waterway between Iran and Oman through which a fifth of the world’s oil shipments and a fifth of gas supplies pass in normal times.
Gulf Arab states, including the UAE, have faced more than 2,000 missile and drone attacks since the start of the US-Israeli war on Iran, targeting US diplomatic missions and military bases as well as oil infrastructure, ports, airports and residential and commercial buildings.
The Iranian foreign minister, Abbas Araghchi, denied a report that he had been in contact with Donald Trump’s special envoy Steve Witkoff.
Oil price chart
The price of Brent crude remains well below the peak of $119.50 a barrel hit during the war.
Analysts at Goldman Sachs said the largest oil market shock on record would have a bigger impact on products such as jet fuel and diesel than on crude.
“Prices have rallied much more for many refined products than for crude,” the analysts Yulia Zhestkova Grigsby and Daan Struyven said in a note, according to Bloomberg. The severe disruptions seen in supplies of medium-heavy crude put the production of diesel, jet fuel and fuel oil at risk.
Saul Kavonic, the head of energy research at the Sydney-based research company MST Marquee, said: “Mixed messages are coming from the Trump administration on the war’s duration, as the market focuses more on the actions on the ground that remain escalatory.”
Blackouts have increased in Asian countries alongside a shift to coal, as most of the oil and gas flowing through the strait of Hormuz normally goes to Asia.
Sri Lanka declared every Wednesday a holiday for public institutions to conserve fuel. “We must prepare for the worst but hope for the best,” the president, Anura Kumara Dissanayake, said at an emergency meeting with senior officials on Monday.
Bangladesh has brought forward Ramadan holidays in universities and introduced planned blackouts across the country to conserve energy. In Thailand, the government has asked civil servants to wear short-sleeved shirts rather than suits to reduce reliance on air conditioning, and to take the stairs instead of lifts.
