Energy infrastructure emerges as war target, lifting prices

TEHRAN

The widening Iran war is turning the Gulf’s energy system into a battlefield — and markets are reacting fast.

After drone and missile strikes hit key oil and gas facilities across the region and shipping thinned sharply in the Strait of Hormuz, crude and natural gas prices surged, reigniting fears of a new inflationary shock.

Brent crude briefly spiked as high as $82.37 a barrel on March 2 — its highest since January 2025 — before settling up 6.7 percent at $77.74.

Early on March 3, Brent traded around $79 a barrel, as markets stayed on edge over whether the disruption would last days or weeks.

Gas prices delivered the bigger jolt. European benchmarks jumped sharply after Qatar’s state-owned QatarEnergy halted LNG output following attacks on major facilities at Ras Laffan and Mesaieed.

Ras Laffan alone accounts for about 20 percent of global LNG supply.

The conflict is now directly squeezing supply at multiple points.

Earlier, the massive Ras Tanura refinery on Saudi Arabia's Gulf coast went into partial shutdown after a strike by drones led to a fire.

Offshore gas fields, including Leviathan and Tamar, were shut in Israel, adding another pressure point for regional supply.

Even more destabilizing for markets has been the effective paralysis of traffic through the Strait of Hormuz, the narrow passage that normally carries about 20 percent of global oil as well as large volumes of LNG.

Iran’s Revolutionary Guards have threatened ships attempting to pass. A senior adviser said the strait was “closed” and warned that any ship trying to transit would be set ablaze.

"We will also attack oil pipelines and will not allow a single drop of oil to leave the region. Oil prices will reach $200 in the coming days," he warned.

Shipowners and operators have pulled back hard. According to reports, a large number of vessels are anchoring outside the strait, while the biggest shipping and logistics players issued “stay safe” instructions or paused routes. This risk avoidance has functioned like a closure — even before any formal blockade is confirmed.

Rystad Energy estimated that the exodus from Hormuz could keep about 15 million barrels per day from reaching global markets — a scale large enough to overwhelm most short-term fixes.

The crisis is also rewriting the economics of shipping. Marine insurers, including major mutuals, were cancelling war-risk cover for vessels operating in Iranian and nearby Gulf waters from March 5, pushing owners into a scramble for alternative coverage — or forcing them to stay put. Freight costs have surged, with supertanker routes to Asia seeing steep rate jumps as risk climbs and capacity tightens.

Any prolonged disruption would hit Asia first. Asia buys about two-thirds of its crude from the Gulf, and officials in Japan said some tankers bound for the country were waiting in the Persian Gulf rather than risk passage through Hormuz.

Europe faces a different vulnerability: gas.

With LNG now a larger share of the continent’s supply mix after reducing dependence on Russian pipeline gas, a Qatar outage quickly squeezes already tight markets — and feeds into inflation expectations and central-bank calculations.

Banks and consultancies have started mapping scenarios. Citi said Brent could trade at $80–$90 in the near term, with a pullback possible if tensions ease. Goldman Sachs estimated an $18-per-barrel “real-time risk premium” embedded in crude, while Wood Mackenzie warned prices could exceed $100 if tanker flows through Hormuz are not restored quickly. JPMorgan estimated crude exports via Hormuz had slumped to roughly 4 million bpd from about 16 million bpd.

Governments do have buffers — at least on paper. The International Energy Agency requires members to hold emergency stocks equivalent to 90 days of net imports, but releasing reserves is politically and logistically complex, and it does not solve a shipping bottleneck if the strait remains too risky to use.

For now, the market’s signal is blunt: when missiles and drones start hitting refineries, LNG plants, and export corridors, the energy system stops behaving like infrastructure — and starts behaving like a frontline.