Oil prices jumped more than 5% following an Israeli strike on Iran's South Pars gas field, escalating the ongoing US-Israeli war against the country. The international benchmark Brent crude rose 5% to $108.66 a barrel on Wednesday, while US West Texas Intermediate (WTI) crude gained 2.5% to $98.65, widening its discount to Brent to the largest since May 2019 amid fears of a prolonged conflict.
Iranian state media reported that natural gas facilities associated with its offshore South Pars field – the world's largest gas field, located off the coast of southern Iran's Bushehr province – were attacked. Promptly after, Iran's Revolutionary Guard threatened to attack oil and gas infrastructure in Qatar, Saudi Arabia, and the United Arab Emirates, heightening the risk of further disruptions to energy supplies in the region.
Later on Wednesday, Qatari authorities reported a fire at the country's Ras Laffan gas facility after an Iranian ballistic missile attack. Qatar's Interior Ministry later said the fire had been brought under control. The US-Israeli war on Iran and Tehran's retaliatory attacks on Gulf neighbors have disrupted oil and natural gas exports from the Middle East and forced production stoppages.
If the disruptions keep oil and gas prices elevated for an extended period, experts say the global economy could experience a wave of inflation. Fighting has halted most shipments via the Strait of Hormuz, through which 20% of global oil and liquefied natural gas supplies pass. Total oil output cuts in the Middle East are estimated at 7 million to 10 million barrels per day or 7% to 10% of global demand.
In response, the Trump administration announced earlier on Wednesday a 60-day waiver of the Jones Act shipping law, temporarily allowing foreign-flagged vessels to move fuel, fertilizer, and other goods between US ports. The United States also issued a general license, authorizing certain deals involving Venezuela's state oil company PDVSA, the US Treasury Department said on Wednesday.
In Iraq, North Oil Company sources said exports had resumed via pipeline after Baghdad and the Kurdistan Regional Government agreed on Tuesday to restart flows. Two oil officials said last week Iraq was seeking to pump at least 100,000 bpd through the port.
Source: www.aljazeera.com