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| Facilities on the South Pars gas field pictured in 2016 (Getty Images) |
Oil prices leapt to nearly $110 a barrel after Iranian media reported an airstrike hitting a facility on the world's largest natural gas field.
The Brent crude oil benchmark hit $109.91 a barrel just after 14:30GMT, more than 5% higher than Tuesday's prices. It still exceeds $108. The surge followed a report from Tasnim, a news agency affiliated with the Islamic Revolutionary Guard Corps (IRGC), that Iran's petrochemical complex on the South Pars gas field had been hit.
Before falling back below the 140p mark, the benchmark UK gas price also increased by 6% to 143.53p per therm.
Read More:How high could UK petrol and diesel prices go?
While the price of both oil and gas spiked, they remained below highs seen earlier in the conflict.
On March 9, oil reached $116.78 per barrel, and on March 3, UK gas reached 162.55p per therm. Tasnim reported that Iran's oil ministry said on Wednesday afternoon that the fire at the petrochemical complex was under control. However, the extent of the damage to the facility remained a mystery. The strike on Iran's energy infrastructure prompted the military to issue a warning that it would respond with "decisive action." "As previously warned, if the fuel, energy, gas, and economic infrastructures of our country are attacked by the American-Zionist enemy, in addition to a powerful counterattack against the enemy, we will severely strike the origin of that aggression as well," the military said in a statement published by Tasnim.
"We consider it legitimate to target the fuel, energy, and gas infrastructures of the countries of origin, and we will retaliate vigorously as soon as possible." The attack and Iran's retaliation, according to Danni Hewson, head of financial analysis at AJ Bell, "helped dial up the temperature once again and put renewed upward pressure on oil prices." She continued, "Any solution to the blockage of the Strait of Hormuz looks pretty distant at this point, and energy markets will likely remain volatile unless and until there is progress on that front." A senior Iraqi official told Reuters that in response to the attack, Iran has also stopped sending gas to Iraq to help with domestic supplies.
The Gas Exporting Countries Forum's data indicate that 94% of Iran's gas supply is utilized domestically. On the gas field, Qatar also runs facilities that it calls North Dome. Qatar, which produces a fifth of the world's liquefied natural gas, had halted production earlier in March in response to the conflict.
Majed Al Ansari, the spokesman for the Qatari foreign ministry, stated that attacks on energy infrastructure "constitute a threat to global energy security."
Source: BBC
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