Oil prices rose above $110 (£82.78) a barrel after Iranian media reported an airstrike hitting a facility on the world’s largest natural gas field.
The Brent crude oil benchmark rose to $112 a barrel in early Thursday trade in Asia, more than 5% higher than Tuesday’s price. The price has since fallen slightly.
The benchmark UK gas price also jumped 6% to 143.53p per therm before falling back to around 140p.
The surge followed reports that Iran’s petrochemical complex on the South Pars gas field had been hit. Several hours later, Qatar reported that there was “extensive damage” at the Ras Laffan industrial site following threats from Iran.
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While the price of both oil and gas spiked, they remained below the highs seen earlier in the conflict.
Oil reached $116.78 a barrel on 9 March, while UK gas reached 162.55p a therm on 3 March.
Iran’s oil ministry said a fire at the petrochemical complex was under control, according to Tasnim, a news agency affiliated with the Islamic Revolutionary Guard Corps.
Iran’s military warned it would take “decisive action” in response to the strike on its energy infrastructure.
“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 targeting the fuel, energy, and gas infrastructures of the countries of origin legitimate and will retaliate strongly at the earliest opportunity.”
Qatar also operates facilities on the gas field, which it calls North Dome.
But the country, which produces a fifth of the world’s liquefied natural gas, had halted production earlier in March in response to the conflict.
Qatar’s foreign ministry spokesman Majed Al Ansari said strikes against energy infrastructure “constitute a threat to global energy security”.
Just after 1815 GMT, the Qatari interior minister said it was responding to “a fire in the Ras Laffan area following an Iranian targeting”. Qatar’s petrol firm QatarEnergy later said there was “extensive damage” at the site.
The interior minister said just after 1900 GMT that it had “initially brought the fire in Ras Laffan under control, with no injuries reported”.
Ras Laffan was among the sites listed by Iran in a warning that it would take “decisive action” after its South Pars gas field facilities were reportedly hit by Israeli strikes.
‘Energy markets will likely remain volatile.’
AJ Bell’s head of financial analysis, Danni Hewson, said the attack and retaliation by Iran had “helped dial up the temperature once again and put renewed upward pressure on oil prices”.
“Any solution to the blockage of the Strait of Hormuz looks pretty distant at this point, and until there is progress on that front, energy markets will likely remain volatile,” she added.
The White House on Wednesday responded to the rising oil price by saying it was suspending the Jones Act — a 1920 law that says only American-made ships can be used to transport goods between US ports.
US Press Secretary Karoline Leavitt said the 60-day waiver of the rules, which are intended to boost shipbuilding, will allow “vital resources like oil, natural gas, fertiliser, and coal to flow freely” as non-American-made ships can now be used.
However, maritime groups in the US said the effect would be minimal, noting that oil prices, not shipping costs, are behind rising prices at the pump.
Experts say earlier efforts by world leaders to ease price pressures, including an unprecedented release of oil reserves, have done little to reduce oil prices.
Meanwhile, Iran has also suspended the flow of gas to Iraq to shore up domestic supplies, a senior Iraqi official told Reuters.
The vast majority of Iran’s gas supply – 94% – is used domestically, according to data from the Gas Exporting Countries Forum.
BBC