Oil and gas prices rose sharply on Tuesday after Iran launched attacks on production facilities in the United Arab Emirates and Iraq, marking the first time such infrastructure has been targeted since the conflict began. Brent crude climbed 2.3% to nearly $103 per barrel, up almost 50% from pre-war levels, while wholesale gas prices rose nearly 3% to €52 per megawatt hour.
The UAE confirmed that a drone struck the Shah natural gasfield, one of the world's largest, on Monday, causing a fire that led to the suspension of operations. Iran also targeted the Majnoon oilfield in Iraq and the UAE's Fujairah port, the country's largest oil storage and export terminal, halting oil loading by state company Adnoc. A tanker was hit by an unknown projectile off Fujairah, causing a fire at the port, which normally handles over one million barrels of oil per day.
The disruptions threaten to cut off the UAE's remaining crude export outlets as the crisis deepens. Daily crude output from the UAE, the third-largest Opec producer, has more than halved since the conflict started. Other UAE export hubs are located within the Gulf, effectively blocked by Iran's control of the Strait of Hormuz, through which a fifth of global oil and gas shipments typically pass.
Gulf Arab states have faced over 2,000 missile and drone attacks since the US-Israeli war on Iran began, targeting diplomatic missions, military bases, oil infrastructure, and residential areas. Iranian Foreign Minister Abbas Araghchi denied reports of contact with US envoy Steve Witkoff.
Analysts at Goldman Sachs warned that the largest oil market shock on record would impact refined products like jet fuel and diesel more than crude. Blackouts have increased in Asian countries, which normally receive most of the oil and gas from the Strait of Hormuz. Sri Lanka declared a weekly public holiday to conserve fuel, Bangladesh brought forward Ramadan holidays, and Thailand urged civil servants to reduce air conditioning use.
