Brent crude oil prices surged dramatically on Thursday, breaking the $119 per barrel mark amid escalating hostilities between Iran and Israel targeting critical energy infrastructure in the Middle East. This sharp increase reflects growing concerns over supply disruptions in a region pivotal to global energy markets. By 1237 GMT, Brent futures had climbed $6.02, or 5.6%, reaching $113.40 per barrel, after earlier spiking more than $11 to hit a peak of $119.13. This level approaches the highest price Brent crude has seen in over three and a half years, last touched on March 9.
Meanwhile, U.S. West Texas Intermediate (WTI) crude experienced a more modest rise, increasing by 7 cents to $96.39 per barrel. Earlier in the trading session, WTI had jumped nearly $4, briefly surpassing the $100 threshold at $100.02. Despite this, WTI continues to trade at its widest discount to Brent in over a decade, highlighting the ongoing divergence between U.S. and international oil benchmarks. Additionally, regional Middle Eastern benchmarks, specifically Dubai and Oman crude premiums, soared to unprecedented levels, reaching approximately $65 per barrel, underscoring the heightened risk premium attached to oil from this volatile area.
The recent spike in oil prices is closely linked to a series of retaliatory strikes following Israel’s attack on Iran’s South Pars gas field, a critical energy asset. South Pars represents the Iranian portion of the world’s largest natural gas reserve, which it shares with Qatar, a key U.S. ally, on the opposite side of the Persian Gulf. The Israeli strike marked a significant escalation in the ongoing conflict, prompting Iran to launch missile attacks on energy facilities across the region. Notably, QatarEnergy reported that Iranian missile strikes severely damaged its Ras Laffan complex, home to Qatar’s principal liquefied natural gas (LNG) plants and the largest of its kind worldwide. The assault also disrupted operations at Shell’s Pearl gas-to-liquids plant, which processes 140,000 barrels per day, forcing a halt in production.
In response to these developments, Saudi Arabia announced it had intercepted four ballistic missiles and thwarted a drone attack targeting a vital gas facility. The kingdom’s SAMREF refinery in Yanbu, a strategic Red Sea port where ExxonMobil holds a stake, was also struck by aerial attacks on Thursday. Although oil loading activities at Yanbu were briefly interrupted, operations have since resumed. Additionally, Kuwait Petroleum Corporation confirmed that its Mina al-Ahmadi refinery suffered a drone strike, which ignited a limited fire but did not cause major damage.
These attacks come amid a broader geopolitical backdrop, with the United States maintaining a cautious stance. The U.S. Federal Reserve recently decided to keep interest rates steady, while signaling expectations of rising inflation, partly influenced by the conflict’s impact on energy prices. The Trump administration, intent on mitigating the economic fallout ahead of the November elections, is reportedly considering easing sanctions on Iranian oil stuck on tankers—estimated at around 140 million barrels—to help stabilize fuel costs. Treasury Secretary Scott Bessent indicated that this move could be imminent.
President Trump clarified that the U.S. and Qatar were not involved in Israel’s strike on South Pars and warned that Israel would refrain from further attacks on Iranian facilities in the gas field unless Iran targeted Qatar. He also cautioned that the U.S. would respond decisively if Iran acted against Doha. These statements highlight the delicate balance Washington seeks to maintain in the region amid rising tensions. Furthermore, there are reports that the U.S. administration is contemplating deploying additional troops to bolster its military presence in the Middle East, signaling preparedness for a potential escalation.
