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Iran’s scattershot response to the weekend’s joint U.S.-Israeli military strikes has widened the conflict into a regional crisis that could have long-lasting implications for the world’s energy markets.
Through Monday afternoon, Iranian missiles and drones targeted key energy sites in Saudi Arabia and Qatar, two of the world’s largest energy exporters, along with oil tankers traveling in the Strait of Hormuz.
At least one-fifth of the world’s oil travels through the strait, and worldwide energy prices are likely to severely inflate if the waterway is closed for an extended period.
The conflict also has reignited tensions over the Red Sea. Houthi rebels, key Iranian proxies in Yemen, vow to retaliate against vessels off their coast after the assassination Saturday of Iran’s supreme leader, Ayatollah Ali Khamenei.
U.S. oil traded approximately 7.6% higher Monday, from $65 a barrel Friday to just over $72. International benchmark Brent rose by about 8.6%, to $79.11 a barrel.
Iran attacks Gulf oil centers
The state-owned QatarEnergy announced a pause in its production of liquefied natural gas after Iranian drones struck facilities within the vast Ras Laffan industrial complex. The complex houses the processing units that create LNG.
Qatar exports nearly 20% of the world’s LNG, and the pause sent shock waves through international gas prices, with futures jumping nearly 40%. That was the largest increase since Russia’s invasion of Ukraine in 2022.
A drone strike Monday on the Aramco-run Ras Tanura oil refinery in Saudi Arabia created massive fires and caused the facility to close. The Saudi government, which owns Aramco, said the facility sustained minor damage and that oil markets would not be affected.
International observers blamed Tehran for the strike, but Iranian Deputy Foreign Minister Majid Takht-Ravanchi said Iran was not responsible for the attack. He said he had been in communication with Saudi leadership concerning the incident.
Still, the attack clearly frustrated Saudi leadership. The AFP, citing an unidentified source close to the government, reported that Saudi Arabia would retaliate against Iranian oil refineries if attacks against its energy production continued.
Iran’s apparent attacks against energy shipments extended to tankers traveling in the Strait of Hormuz, which has been effectively closed since hostilities began.
Oman’s state-run news agency reported that an unmanned ship attacked a Marshall Islands-flagged oil tanker, causing explosions and killing at least one crew member. It is not immediately clear whether Iran was responsible for the attack. Tehran has not claimed responsibility.
The attacks have prompted some in the region to halt production. DNO, Gulf Keystone Petroleum, Dana Gas and HKN Energy, which all operate oil fields in Iraqi Kurdistan, have halted production at their facilities in anticipation of attacks or debris-related damage.
Europe’s energy problem
The European Commission convened an emergency meeting to address the global consequences of the U.S. and Israeli attacks on Iran. The commission said it “is closely monitoring price and supply developments” after the operation and plans to increase cooperation with shipping companies and airlines.
Kaja Kallas, vice president of the European Commission, said an escalation of the conflict in Iran could have devastating economic outcomes for Europe.
“The events unfolding in Iran must not lead to an escalation that could threaten the Middle East, Europe and beyond, with unpredictable consequences, also in the economic sphere. The disruption of critical waterways, like the Strait of Hormuz, must be avoided,” she wrote in a statement.
Europe has been working to eliminate its reliance on Russian oil. The European Union adopted a regulation last year that would fully end imports of Russian LNG and pipeline gas by the end of the year, requiring the continent to rely heavily on Middle Eastern oil.
A persistence of trade disruptions in the Strait of Hormuz and the Red Sea into the second quarter could halt refill operations and rapidly increase gas prices in Europe.
Europe’s LNG stocks were already in a much worse position than at the same time last year, according to the Brussels-based think tank Bruegel, with 46 billion cubic meters in reserves at the end of February, compared with 60 in 2025.
• Vaughn Cockayne can be reached at vcockayne@washingtontimes.com.
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