Brent crude spiked more than 5 per cent to over $110 a barrel on Wednesday after Israel struck the world’s largest natural gas reserve located in Iran in a coordinated operation with the United States.
The attack marked the first time Iran’s upstream oil and gas infrastructure, as opposed to those in the gulf, has been targeted since the war began on February 28 as the crisis entered its 19th day.
Iran shares its massive South Pars gas field with Qatar, which uses its side to supply roughly a fifth of the world’s LNG. Qatar’s foreign ministry condemned the strikes as “a dangerous and irresponsible step.”
Iran’s response was a bit tougher. Tehran sent out a list of energy facilities it planned to strike, including those in Saudi Arabia, the UAE, and Qatar, naming specific targets including Saudi Aramco’s Samref refinery and Jubail petrochemical complex and the Al Hosn gas field in the UAE. Iran’s military joint command said it would escalate the war “in new ways.”
The price moves came on top of what has already been one of the strongest oil rallies in years. Brent has surged roughly 80 per cent since the conflict began, driven largely by the near-total shutdown of tanker traffic through the Strait of Hormuz, the chokepoint that handles about 20 per cent of global oil and gas flows.
The International Energy Agency (IEA) last week announced the largest emergency reserve release in its history—400 million barrels—and the U.S. committed to tapping 172 million barrels from the Strategic Petroleum Reserve over 120 days. So far, the reserves have done little to contain prices. Gas prices have spiked to the highest levels since 2023, up nearly a dollar since the war with Iran began.
But the spike in WTI crude, the benchmark for Texas oil, is nothing compared to what’s happening across the Pacific. Dubai crude—the pricing benchmark for Asian buyers—hit an all-time high above $150 a barrel last week. Oman crude settled above $152 on Monday.
WTI, meanwhile, is trading around $96 in the U.S. That’s an unprecedented $50-plus gap for the same commodity, which normally has a spread of $5-$8, Fortune Media reported. Physical crude in Asia is also trading at a nearly $40 premium over its paper equivalent, a sign that actual barrels are far scarcer than futures suggest.
Analysts fear that the shortage in Asia could conflagrate into a more dire global scenario if the war continues. Rory Johnston, a commodities analyst specialising in oil, wrote that the longer the Strait stays closed, the more Asia’s supply shortage becomes everyone’s problem.
Iran Hits Qatar’s Ras Laffan in Retaliation
Also on Wednesday, the Ras Laffan industrial complex sustained damage after a missile attack, QatarEnergy said. “Emergency response teams were deployed immediately to contain the resulting fires, as extensive damage has been caused,” QatarEnergy added.
Qatar’s interior ministry attributed the attack to Iran and said that it has “gained preliminary control over the fire at Ras Laffan, with no reported injuries”.
Tehran earlier on Wednesday listed the 305,000 b/d Ras Laffan refinery in Qatar among five downstream facilities it said it would attack shortly in retaliation for what it described as US-Israeli strikes on Iranian gas treatment plants at the South Pars gas field.
It was not immediately clear whether the refinery or the nearby 77mn t/yr LNG export terminal were directly attacked or sustained any damage.
Tehran also threatened strikes against the 400,000 b/d Samref refinery at Yanbu and the Sadara petrochemical complex at Jubail in Saudi Arabia, Qatar Chemical in Doha and the Al-Hosn sour gas field in Abu Dhabi.
Besides, Saudi Arabia came under attack on Wednesday night local time, according to the Saudi defense ministry. “Part of an intercepted ballistic missile” fell near a refinery located south of Riyadh, the ministry said. It also reported intercepting drones aimed at an unnamed gas facility in the country’s east.
Iran’s Intelligence Minister, Esmaeil Khatib, Killed
Iran’s intelligence minister, Esmaeil Khatib, was on Wednesday killed a few hours after Iranian state media confirmed the deaths of the country’s powerful security chief Ali Larijani and the head of the IRGC’s Basij paramilitary force.
Iran President Masoud Pezeshkian said the “cowardly assassination” had left Iran “in deep mourning”, after Israel said it killed Khatib in an air strike.
Since the assassination of Supreme Leader Ayatollah Ali Khamenei on the first day of the war on 28 February, multiple senior Iranian officials and commanders have been killed in efforts by Israel and the US to weaken the regime’s leadership.
In a post on X, Pezeshkian extended his condolences to the Iranian people over the officials’ deaths, adding he was “certain their path will continue more steadfastly than before”.
Speaking to the BBC, a woman from Tehran said the “killing of Khatib might help the people since he was among the leadership”. “It might be that when people come out after a call to protest, the likelihood of them being killed is lower now,” she said. “Even though they all have replacements, these were the main figures.”
Earlier on Wednesday, Israel’s defence minister Israel Katz announced that Khatib had been “eliminated” in an Israeli strike on Tehran.
“Prime Minister Benjamin Netanyahu and I have authorised the IDF to eliminate any senior Iranian official for whom the intelligence and operational circle has been closed, without the need for additional approval,” he said.
The IDF said Iran’s Ministry of Intelligence had been instrumental in supporting the regime’s “repression and terrorist activities” and Khatib had played a “significant role” in the “arrest and killing of protesters” during the crackdown on recent protests in Iran.
Khatib was appointed as Iran’s defence minister by the late former president, Ebrahim Raisi, in 2021. He studied Islamic jurisprudence under several high-ranking clerics, including Khamenei, and held various senior posts in the ministry of intelligence and Office of the Supreme Leader.
He was sanctioned by the US Treasury for his role as head of Iran’s Ministry of Intelligence for “engaging in cyber-enabled activities against the United States and its allies” in 2022.
More than 1,300 people have been killed in Israeli and US strikes on Iran since the start of the war, including 226 women and 204 children, according to the Iranian government.
Qatar Expels Iranian Envoy
The Qatari foreign ministry says it “reserves its right to respond” to Iranian missile attacks on its Ras Laffan Industrial City.
It described the attack “as a dangerous escalation” and said Qatar “will not hesitate” to protect its sovereignty, the foreign ministry says.
The Gulf nation declared Iran’s defence ministry representative at the Iranian embassy in Qatar as persona non grata and ordered them to leave the country within 24 hours.
“Qatar reserves its right to respond in accordance with Article 51 of the United Nations Charter and the right to self-defence as guaranteed by international law, stressing that it will not hesitate to take all necessary measures to protect its sovereignty, security, and the safety of its citizens and residents,” a statement said.
“Despite Qatar’s policy of distancing itself from this war since its outset and its commitment to avoiding any escalation, the Iranian side continues to target it and neighboring countries in an irresponsible approach that undermines regional security and threatens international peace.”
It continued: “The Iranian side continues its escalatory policies that are pushing the region toward the brink and drawing countries not party to this crisis into the conflict zone.”
Trump Says US ‘Finishing Off’ Iranian State
Similarly, the president of the United States Wednesday posted twice on social media about the war in Iran. In the first, Donald Trump defended his war as “putting out of business” the “Number One State Sponsor of Terror”.
In the second, he speculated about destroying the “Iranian Terror State” and leaving America’s allies to deal with the impact on the Strait of Hormuz. Since launching the war, Trump has flipped between asking allies for help, saying America doesn’t need any allies in this conflict and never did, and criticising allies for not helping him.
Global oil and gas prices – including those in the US – depend heavily on the unimpeded flow of shipments through the Strait of Hormuz, which has been threatened or attacked by Iran since the US began bombing.
Trump has also threatened to leave responsibility for opening the Strait of Hormuz to countries that use the route in his latest tirade against America’s allies over their refusal to provide military support.
Iran announced it had closed the key waterway more than a fortnight ago and that all vessels passing through were at risk of attack, sending global oil prices soaring. Around a fifth of the world’s oil passes through the Strait.
In a post on Truth Social, the US president wrote: “I wonder what would happen if we ‘finished off’ what’s left of the Iranian Terror State, and let the Countries that use it, we don’t, be responsible for the so called ‘Strait?’ That would get some of our non-responsive ‘Allies’ in gear, and fast!!!”.
British Military Experts Partner US on Reopening Strait of Hormuz
British military experts are working with the US on options to reopen the Strait of Hormuz. The team has been sent to US Central Command, which is responsible for American military operations in the Middle East, Tottenham Independent reported.
But defence sources stressed the situation in the Strait of Hormuz was so dangerous that not many nations would be willing to put warships “in the middle of that threat right now”.
However, British experts continue to work with the US on how the strait could possibly be reopened as the continued blockade threatens the global economy.
Armed forces minister Al Carns said: “In 1987 when this last happened, it took 30 warships to escort in the Strait of Hormuz. That gives you just an example of the resources required.”
He said the situation was even more complex now, with Iran’s arsenal including fast attack boats, different kinds of mines, ballistic missiles and unmanned drones in the air, on the sea and beneath the waves.
Carns said: “I would say this must be a multinational solution. We’re not anywhere near that at the moment, but I would say one thing: that there’s one thing worse than working with allies, and that’s working without them.”
Defence Secretary John Healey discussed the situation with counterparts from France, Germany, Italy and Poland on Wednesday. “We are working with allies to reinforce regional security and protect British interests,” Mr Healey said.
Another senior defence official said the situation was “incredibly fluid”, and “the level of threat is such that I don’t see many nations being willing to put warships into the middle of that threat right now”.
Trump has repeatedly berated countries including the UK for failing to respond to his request for support in the maritime chokepoint.
Emmanuel Addeh
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