Oil Prices Surge After Attack on Iran Gas Field

Energy markets faced significant upheaval following missile strikes on the South Pars gas field in Iran, the world’s largest gas field. This escalation, marking the first attack on Iranian energy production facilities since the onset of conflict on February 28, has put additional pressures on global oil prices.

Brent crude oil prices surged by 3.1 per cent, reaching $110.70 per barrel by Wednesday night in New York. Concurrently, UK natural gas prices increased by 6 per cent, hitting 139.4p per therm. The Iranian Revolutionary Guard has warned of plans to retaliate, indicating potential attacks on energy infrastructure throughout the Gulf region.

Khatam al-Anbiya, the operational command of Iran’s military, released a statement detailing retaliation plans targeting the countries perceived as aggressors. Iranian state media attributes the attacks to a joint operation by Israel and the United States, although neither nation has confirmed involvement.

Iran has alleged that Gulf states facilitated these attacks from their territories, subsequently publishing a list of “legitimate targets” that includes oil and gas facilities in Saudi Arabia, Qatar, and the United Arab Emirates. The majority of gas produced at South Pars serves domestic consumption, with Iran’s gas production totalling 276 billion cubic metres in 2024, 94 per cent of which was used within the country.

Earlier on the same day, Brent crude prices had dipped near $100 per barrel after Iraq and Kurdistan reached an agreement to resume crude exports via an overland pipeline to Turkey. This route effectively bypasses the strategically important Strait of Hormuz. Optimism in the market had previously been bolstered by indications from the International Energy Agency about potential further releases of reserves after a record 400 million barrel drawdown.

Market analysts suggest that the recent attack marks a significant change in the regional conflict dynamics, potentially jeopardising energy infrastructure and stability. The escalation has prompted concerns that alternate export routes across the region could soon be targeted. The recent outbreak of conflict has led to extreme volatility, with oil prices peaking at nearly $120 per barrel earlier this month—the highest levels seen since 2022.

As the situation continues to unfold, the implications for global energy security remain serious. Voices from the international community, including the Qatari foreign ministry, have called the attack a dangerous escalation, highlighting the risks posed to vital energy facilities.