The escalating attacks on key oil and gas projects in the Middle East are expected to fuel a new phase of the ongoing conflict, with profound consequences for the world’s energy supplies and the global economy.

The Iran regime has vowed to target a string of key energy infrastructure across the region after warning that an Israeli strike on a production facility for its largest gasfield at South Pars on Wednesday had ignited a “full-scale economic war”.

South Pars is part of the world’s largest natural gasfield, which is shared by Iran and Qatar. It is located offshore between the two Gulf states and forms a domed extension to Qatar’s giant North Field.

Within hours of the South Pars strike, Iranian missiles hit Ras Laffan, the site of Qatar’s core liquefied natural gas processing facilities, causing “extensive damage” to the world’s largest suppliers of seaborne gas cargoes, according to Qatar’s state gas company.

The damaged facilities will take three to five years to repair, according to the QatarEnergy chief executive, Saad al-Kaabi, raising fears of a protracted global gas supply crisis.

“I never in my wildest dreams would have thought that Qatar would be – Qatar and the region – in such an attack, especially from a brotherly Muslim country in the month of Ramadan, attacking us in this way,” al-Kaabi told the Reuters news agency.

The Qatari state confirmed an attack involving five ballistic missiles launched from Iran. Although four were intercepted, the fifth missile struck the Ras Laffan industrial complex, which is responsible for producing the state’s gas exports.

A Qatari government spokesperson warned that targeting energy infrastructure “constitutes a threat to global energy security, as well as to the peoples of the region and its environment”.

Qatar’s gas exports made up a fifth of the global LNG market last year, of which about 80% was shipped to energy-hungry developing economies in Asia. A long-term disruption to its exports would have serious consequences for gas buyers around the world by lifting market prices globally.

More sites threatened and targeted

After the South Pars attack, Iran’s state media warned that swathes of prominent regional oil and gas targets belonging to Saudi Arabia, the UAE and Qatar were now “direct and legitimate targets” and should be evacuated before attacks began “within hours”.

These include Saudi Arabia’s Samref refinery, near the Red Sea port of Yanbu, and the Jubail petrochemical complex, as well as the UAE’s al-Hosn gasfield and Qatar’s Mesaieed petrochemical complex.

“So far, Iran has largely followed through on its stated actions, which makes this a highly credible threat,” according to Aditya Saraswat, of the consultancy Rystad Energy.

The Saudi defence ministry confirmed a drone attack on the Samref refinery on Thursday. It has intercepted a ballistic missile launched towards Yanbu, which is Saudi Arabia’s only outlet for crude exports amid Iran’s stranglehold on the strait of Hormuz.

Kuwait’s Mina al-Ahmadi and Mina Abdullah refineries were also targeted by drones, resulting in fires at both sites, according to Kuwait’s state news agency.

Meanwhile, at the UAE’s Habshan complex, another of the world’s largest gas processing facilities, falling debris from intercepted missiles caused the facility to shut down, according to the state oil and gas giant Adnoc. The company said its Bab oilfield was also targeted.

Market reaction

Gas markets surged in response to the strikes, with the European benchmark quickly climbing 30% higher as the trading day began to double the pre-crisis market price and reach the highest level since early 2023.

“We are now well on the road to the doomsday gas crisis scenario,” said Saul Kavonic, the head of research at the consultancy MST Marquee. He warned that the LNG supply disruption could last for months or even years once the war ends, depending the extent of the damage, keeping gas prices high.

The risk of prolonged military aggression and long-term damage to the region’s energy production facilities have compounded fears in the global oil markets, which are still reeling from the greatest energy supply shock in history after the shutdown of the strait of Hormuz.

The price of Brent crude, the international benchmark, is expected to breach the $120 a barrel mark in the immediate aftermath, according to Rystad Energy analysts, with further price rises possible depending on the severity of the damage sustained.

Donald Trump has warned Iran against further attacks on Qatar’s LNG facilities, threatening to “massively blow up the entirety of the South Pars gasfield”.