Oil and natural gas prices surged on Thursday after the world’s largest natural gas field in Qatar and key energy infrastructure across the Gulf states came under attack from Iran amid the continuing Middle East conflict.
Iranian missiles struck Qatar’s Ras Laffan complex and the UAE thwarted attacks on its Habshan gas facility and Bab fields, with debris from successful interceptions causing production to be halted. In Saudi Arabia, two refineries near Riyadh were also hit from debris shrapnel. The attacks on the Middle East oil and natural gas facilities followed an Israeli strike on Iran’s South Pars gas field on Wednesday.
Ras Laffan and Samref facilities hit
QatarEnergy confirmed the attacks on Ras Laffan Industrial City and its LNG facilities and said the attacks have resulted in extensive damage to the Pearl GTL (gas-to-liquids) facility as well as sizeable fires. “Emergency response teams were deployed immediately to contain the resulting fires, as extensive damage has been caused. All personnel have been accounted for and no casualties have been reported at this time,” it said in a statement.
On Thursday, the Saudi Ministry of Defence said a drone had crashed in the Samref refinery in Yanbu – operated by Aramco and Exxon – and that damage assessment was underway.
The Abu Dhabi Media Office said overnight that the authorities were responding to incidents at the Habshan gas facilities and at the Bab field caused by falling debris from the successful interception of missiles. “The gas facilities have been shut down and no injuries have been reported,” it said.
‘Threat to global energy security’
The UAE, Saudi Arabia and Qatar denounced the Iranian attacks targeting their energy infrastructure. The UAE condemned the “Iranian terrorist attacks targeting the Habshan gas facility and the Bab field,” which it said was successfully intercepted by the country’s air defences with no injuries reported.
In a statement, the UAE Ministry of Foreign Affairs said these attacks targeting critical infrastructure and oil facilities not only “constitute a dangerous escalation and a violation of international law,” but also represents a direct threat to regional security and stability, as well as to global energy security.
A joint statement issued by Foreign Ministers of Arab and Islamic countries who met in Riyadh on Wednesday night also condemned the attacks. “The Ministers further affirmed that such attacks [by Iran] could not be justified under any pretext or in any manner whatsoever. The Ministers also stressed the right of states to defend themselves in accordance with Article (51) of the UN Charter,” they said.
HE Dr Sultan Al Jaber on ADNOC operations
On Wednesday, HE Dr Sultan Al Jaber, UAE Minister of Industry and Advanced Technology, and Managing Director and Group CEO of ADNOC, told the Wall Street Journal: “We will continue to do everything possible to mitigate the situation as we assess, location by location, product by product and shipment by shipment. We will continue to act as a responsible, reliable energy supplier to the world.”
Once the conflict concludes, HE Dr Al Jaber said, “we will be in a position to quickly turn around and ramp up our production to go back and reach our capacities.”
Market indices climb following attacks
The Brent crude oil benchmark crossed $114 a barrel on Thursday, more than 5% higher than Tuesday’s prices in Asia, while benchmark UK gas price also jumped by 6% to 143.53p a therm before retreating to the 140p mark.
European gas prices surged to their highest level since the war began, with the TTF benchmark, which determines the price for many gas supply contracts, opened up more than 30 per cent higher at €70.70 per MWh before paring back to €67 per MWh. In the US, Henry Hub futures climbed 3.4 per cent to $3.17 per million British thermal units during Asian trading on Thursday, while futures for heating oil rose 5.9 per cent to $4.45 a gallon.
According to Reuters, Iran has also suspended the flow of gas to Iraq to shore up domestic supplies. Around 94% of Iran’s gas supply is used domestically, according to data from the Gas Exporting Countries Forum.
Kuwait’s KPC on Thursday also reported fires at two of the country’s three refineries – the 346k b/d Mina Al-Ahmadi and 454k b/d Mina Abdullah facilities – after drone strikes in the early hours.
The outlook for natural gas and LNG
Commenting on the situation, analysts cautioned that energy markets will likely remain volatile as Gulf energy giants assess the impact of the attacks on their infrastructure.
“The last major incident at an LNG facility was Freeport LNG, in 2022: the facility was down during 8 months (including approvals from authorities to restart),” said Anne-Sophie Corbeau, Global Research Scholar at the Center on Global Energy Policy, Columbia University.
“While we don’t know yet the extent of the damage, we are likely talking about months of repairs… To summarise, we could be back to where we were in 2021 in terms of LNG supply based on where we expected to be in 2026. This is a 5-year setback,” she wrote on LinkedIn.
According to Vandana Hari, founder and CEO of Vanda Insights and a columnist for Energy Connects, the world has entered a new phase of the war. “It is now energy infrastructure damage and destruction, not just precautionary shutdowns. The aftershocks are going to be felt for months, possibly years,” she said.
“The risk of prolonged energy supply disruptions increases when the conflict moves from trade impasse to production shut-ins and infrastructure damage. The attack on Qatar’s natural gas export hub raises the nervousness in the market, and oil and natural gas prices surge accordingly,” said Norbert Rücker, Head Economics and Next Generation Research at Julius Baer.
“The natural gas market showed some confidence over the past days that a temporary loss of Qatari supplies is digestible thanks to rising exports elsewhere and to power generation shifting to coal and renewables. This confidence might be tested in the coming days,” he added.
