Overnight, WTI crude oil slid from above $102 to below $94, while U.S. stock markets strengthened. Amid a series of headlines about "U.S.-Iran contact," "Trump signaling negotiations," and "shipping traffic in the Strait of Hormuz," the market has been attempting to find signs of de-escalation in the conflict. However, as the Middle East conflict enters its third week, energy infrastructure around the Persian Gulf is facing successive attacks, suggesting the market may have celebrated too soon.
Attacks have spread for the first time to the "production side." On Monday, the Shah high-sulfur gas field in the UAE was attacked by a drone, triggering a fire. Authorities in Abu Dhabi later stated that the blaze had been contained in the western Rub' al Khali desert, with no reports of casualties. However, operations at the field have been suspended for safety reasons, and officials are assessing the damage. The Shah field is jointly operated by Abu Dhabi National Oil Company (ADNOC) and U.S.-based Occidental Petroleum.
Simultaneously, a spokesperson for the Iraqi oil ministry confirmed that the Majnoon oil field, a core asset in southern Iraq, was also attacked, though specific damage details were not disclosed. Senior energy industry columnist Javier Blas noted on social media platform X that this marks a significant turning point in the conflict. Blas stated bluntly, "Today brought further ominous developments. For the first time, oil and gas production facilities (as opposed to refineries, terminals, and storage tanks) were successfully targeted." He also revealed that "Saudi Arabia also faced a large-scale drone swarm attack."
Middle Eastern energy facilities have been hit repeatedly. According to reports on Monday, March 16:
- UAE's Fujairah oil facilities were attacked again: On March 16, the media office of the Emirate of Fujairah issued an official statement confirming that oil facilities at an important port in Fujairah had been struck by a drone, causing a fire. - UAE's daily production halved: On March 16, state-owned oil giant Abu Dhabi National Oil Company was forced to implement widespread shutdowns, reducing the country's daily crude output by more than half. - Attack near Dubai International Airport ignites storage tank: Earlier reports on March 16 indicated a drone attack near Dubai International Airport ignited a storage tank; Dubai civil defense teams successfully controlled the fire. There were no immediate reports of casualties. - Fuel storage facilities at Fujairah port attacked: On the 14th, Iranian sources stated that an Iranian drone hit fuel storage facilities at Fujairah port, causing a fire.
Most notably, the UAE's main port, Fujairah, was attacked again on Monday, the latest in a series of recent assaults. Fujairah is the UAE's only export outlet bypassing the Strait of Hormuz. Informed sources revealed that damage from the latest strike is being assessed. As a precaution, the UAE had already halted production at its Ruwais refinery last week.
Disruptions at Fujairah port could impact global supply chains. The port is a critical logistics hub in the Middle East and holds significant importance for the current global crude market. With the conflict rendering the Strait of Hormuz nearly impassable, Fujairah port, located outside the strait, has become a vital "lifeline" for the safe export of crude oil and fuel. Attacks on this port directly trigger market sensitivities regarding potential oil supply disruptions.
The tension in energy supply is now transmitting globally. Major energy-consuming nations, from India and Australia to Japan, are feeling the pressure of fuel shortages. At a deeper level, soaring energy costs threaten the global technology supply chain. The semiconductor industry faces potential supply chain disruptions, with high market concern that Taiwan, China, a key manufacturing hub, could see a significant rise in power costs, thereby increasing production costs for global tech hardware.