Iran intensified its attacks on Gulf Arab neighbors’ energy infrastructure after Israel hit Iran’s main natural gas field in what the Associated Press described as a major escalation in the Mideast war. On Thursday, the AP reported that Iran set Qatar’s liquefied natural gas facilities and a Kuwaiti oil refinery ablaze as retaliation after the earlier South Pars strike. The violence widened concerns about where the fighting could spread next and how quickly energy supplies—and prices—could tighten.
The South Pars field, which came under attack this week, is part of the world’s largest natural gas field, shared by Iran and Qatar. The reservoir is called South Pars on the Iranian side and the North Field on the Qatari side, according to the AP report dateline from Frankfurt. Because the resource underpins different national energy strategies, strikes against it can ripple across both domestic demand and global fuel markets.
Iran’s targeting came in response to Israel’s attack on South Pars, the AP reported, and it sent “new shockwaves across the region and beyond.” The AP said the broader Iran war has already delivered a “massive energy shock” to the global economy by choking off most crude oil and liquefied natural gas exports through the Strait of Hormuz and by attacking ships and key export facilities in Persian Gulf neighbors.
In the South Pars case, the AP said the target was not primarily Iran’s export volumes but its biggest source of domestic energy. The AP report described how Iran uses natural gas heavily for electricity generation, and how much of that supply is tied to South Pars: it said 80% of Iran’s gas comes from the reservoir. It also said Iran’s cold climate contributes to major household heating demand, much of it subsidized, which can discourage efficient use.
The AP report contrasted the gas systems of Iran and Qatar. It said Qatar has a much smaller population and has invested billions in developing the field as a source of liquefied natural gas for export, which it loads on tankers from Ras Laffan. The same report said Qatar’s LNG business has made it a supplier of about a fifth of the world’s LNG, and it noted that Ras Laffan shut down on March 2 after an Iranian attack and then was hit again on Thursday, with the extent of damage described as unclear.
For LNG markets, the AP said the shutdown and subsequent strikes were raising prices in Asia and Europe as traders weighed the risk of further disruption. Data and analytics firm Energy Intelligence characterized Thursday’s strikes as part of “a dangerous escalation” of the conflict and “a grim warning” for the LNG market, the AP reported. The AP also cited energy intelligence firm Montel News, which said the South Pars attack was “a serious escalation” due to the threat of Iranian retaliation.
Iran’s own energy profile, the AP said, is shaped by sanctions and limited investment that have left it struggling with “rickety” infrastructure and shortages even with large reserves. It said power shortages have occurred because of interruptions to gas supplies, and it pointed to a July episode in which public buildings had to shut down after a heat wave strained the power grid. The AP also said Iran exports relatively little natural gas—about 9 billion cubic meters—compared with Qatar’s more than 120 billion cubic meters, and that Iran’s export customers include Turkey and Armenia.
The AP reported that Iran has tried to develop LNG projects on its Persian Gulf coastline, but sanctions over its nuclear program blocked those efforts by barring the import of needed technology and investment. It said a third site at Asulayeh—near the site of the attacks—was reportedly near completion after construction started nearly 20 years ago.
Minutes and hours after the earlier Wednesday attack, the AP reported that U.S. President Donald Trump said on social media that Israel would not attack South Pars again. The AP said Trump warned that if Iran continued striking Qatar’s energy infrastructure, the United States would retaliate and “massively blow up the entirety” of the field.
The AP report linked the region’s energy vulnerability to wider market reactions: although South Pars mainly supplies Iran’s domestic needs, it said global oil prices rose and European gas prices surged on news of the attack. The AP attributed that reaction largely to fears that Iranian retaliation could hit Gulf energy infrastructure, setting up a feedback loop in which battlefield decisions increasingly translate into fuel-price risk for households and businesses far from the Persian Gulf.