Global benchmark oil prices jumped back toward their highest in nearly four years early Thursday after Iran targeted energy production in the Gulf region.
The front-month Brent futures contract rose 6.7% to $114.67 a barrel, approaching the $119.50 touched on March 9, which was the highest price since July 2022.
However, the price of U.S. West Texas Intermediate crude is only only up 1% to $97.28, widening the spread with Brent to its biggest in around 11 years, according to Reuters, as supplies through U.S. pipelines increase.
The renewed oil price surge reflects traders fears that Israel’s attack on Iran’s South Pars gas field earlier this week, and Tehran’s targeting of Persian Gulf energy facilities in response, signaled an escalation in the war that will further curtail oil and gas supplies.
Prices had already risen sharply in recent weeks after Iran said it would close the Strait of Hormuz — the main transport route for oil tankers out of the Persian Gulf — to most traffic.
Since the U.S. and Israel launched their first wave of attacks on Iran on Feb. 28, and following Tehran’s closure of the Strait, Brent has surged about 55%.
“Fears of a sustained energy shock have resurfaced after the escalation in the Iran war sent oil and gas prices soaring. The prospect of a longer, more drawn-out conflict is in sharp focus, as both sides ratchet up attacks on energy infrastructure,” said Susannah Streeter, chief investment strategist at Wealth Club.
“Warnings that oil could reach $150 a barrel have resurfaced,” she added.
Qatar said on Wednesday that Iranian missile attacks on its core LNG processing operations at Ras Laffan, caused “extensive damage” to the energy hub. Saudi Arabia said it destroyed four ballistic missiles launched on Wednesday toward Riyadh and an attempted drone attack on a gas facility, according to Reuters.
The United Arab Emirates announced midweek that operations had been halted at its Habshan gas facilities.
U.S. President Donald Trump, in a social media post late Wednesday, said that if Iran persists in targeting Gulf production then the “the United States of America…will massively blow up the entirety of the South Pars Gas Field at an amount of strength and power that Iran has never seen or witnessed before.”
The halting of much Middle East gas production is causing a surge in benchmark natural gas prices in Europe on concerns global demand will be chasing less supply. The Dutch TTF natural Gas contract for April jumped 21% on Thursday to €66.0 per megawatt hour, the highest since Russia’s full blown invasion of Ukraine in early 2022.