DUBAI — Iran’s escalating strikes on energy infrastructure across the Persian Gulf are stoking fears of a full-blown energy crisis, sending already high oil and gas prices surging and widening the scope of a war that has spilled across the region and upended the global economy.
After an Israeli strike Wednesday on Iran’s portion of the South Pars gas field, which it shares with Qatar, Iran retaliated with attacks that caused “extensive damage” at Qatar’s Ras Laffan Industrial City, the world’s largest liquefied natural gas facility, officials said. The attacks sent the global oil benchmark soaring and prompted a scramble in Washington. President Donald Trump threatened “to blow up the entirety” of Iran’s South Pars gas holdings if Iran attacked Qatar again, and his treasury secretary said the United States would consider lifting sanctions on millions of barrels of Iranian oil.
“Energy warfare has been utilized from day one” of the conflict, said Anna Jacobs, a nonresident fellow at the Arab Gulf States Institute in Washington, to the greatest detriment of countries that rely on the Strait of Hormuz. Iranian attacks have mostly closed the narrow channel, a choke point for one-fifth of the world’s oil supply, for weeks.
The Iran war is “in an escalatory phase right now … it is a nightmare scenario,” she said. The impact is especially devastating for Qatar, a nation of 3 million people that in recent years had carefully managed its relations with the U.S. and Iran, and actively tried to avoid the conflict.
“This is what we have warned against time and time again,” said Emirati businessman Omar Al Busaidy, president for UAE and Oman of Future Pipe Industries, a Dubai-based company that makes fiberglass pipes for infrastructure projects. “Both sides are trying to strong-arm the other to surrender by going after the lifeline of the economy. They are hitting where it hurts the most … and U.S. interests are being hurt.”
Defense Secretary Pete Hegseth refused to predict how long the conflict would continue. Only Trump will decide when it is finished, he said at a news briefing Thursday.
During a meeting with Japanese Prime Minister Sanae Takaichi at the White House on Thursday, Trump said he would not intensify the conflict further by committing U.S. ground forces. The U.S. is “not putting troops anywhere” in Iran, he told reporters. But he also said, “If I were, I certainly wouldn’t tell you.”
Trump appeared to refer to Kharg Island, Iran’s Gulf oil export hub, when he threatened: “We can take out the island, anytime we want. I call it the little island that sits there, totally unprotected.”
As the latest attacks rattled markets and the price of Brent crude, the global oil benchmark, briefly climbed past $119 per barrel before falling back to $108 on Thursday, Treasury Secretary Scott Bessent said the administration might lift restrictions on some 140 million barrels of Iranian oil that have already been loaded onto vessels — a week after lifting sanctions on Russian oil already in tankers.
The administration said the move would merely divert crude that Iran has already been selling to China at a discount, allowing it to flow at market price to other countries in Asia. “If we go through as we plan to unsanction the Iranian oil, that oil will go up to a market price, and it will end up in places other than China,” Bessent told the Fox Business Network. But analysts widely agree that lifting the sanctions would give Iran a wartime financial boost.
“Two countries that we’ve spent years sanctioning are now the direct beneficiaries of a conflict the United States chose to start,” said Brett Erickson, managing principal at Obsidian Risk Advisors, which specializes in financial crime and regulatory issues. “The United States has spent years building sanctions architecture specifically designed to constrict Russia and Iran. Within three weeks of this conflict starting, we’re tearing it to shreds.
“That is not a short-term adjustment, it’s a complete strategic collapse.”
Although the attacks on energy infrastructure in recent days are a substantial escalation, they make up a fraction of the damage both sides could inflict, analysts say. Some are warning that if the attacks on oil and gas fields, liquefaction facilities and shipping terminals continue, the cost of a barrel of crude could spike to $150.
“Things are escalating, but they can escalate even more rapidly,” said Andrew Leber, a nonresident fellow at the Middle East program of the Carnegie Endowment for International Peace. “Iran is still controlling its pace.”
The attacks in Qatar, he said, in addition to those in Saudi Arabia, have made clear the regime’s military capabilities.
Iranian drones in recent days have struck two refineries in Kuwait and one in Saudi Arabia, officials said. Iran also attacked the Saudi Red Sea port of Yanbu, from which the kingdom was exporting oil to avoid the Strait of Hormuz.
Iran has weathered more than 15,000 strikes by the U.S. and Israel over the past three weeks. But at the Pentagon on Thursday, Gen. Dan Caine, chairman of the Joint Chiefs of Staff, acknowledged that Iran can still put regional partners’ oil infrastructure at risk.
“Clearly, they came into this fight with a lot of weapons,” Caine said.
Leaders in the Gulf and around the globe called for de-escalation. In a joint statement on Thursday, representatives from 12 countries in the region, including Qatar, Turkey, Jordan and Lebanon, denounced what they called Iran’s “deliberate attacks” targeting civilian areas, oil facilities, airports, diplomatic buildings and residences.
The leaders of Britain, France, Germany, Italy, the Netherlands and Japan, in their own statement, called for an immediate moratorium on attacks on civilian infrastructure, including oil and gas facilities, and condemned the effective closure of the Strait of Hormuz.
The heads of state and government of the 27 nations of the European Union, meeting Thursday in Brussels to discuss how to contain the war’s economic fallout, called for a “moratorium on strikes against energy and water facilities.”
“The European Union will continue to engage with partners in the region to contribute to de-escalation and regional stability,” the bloc said in a statement. It did not criticize the U.S. European leaders have been divided over the conflict, but many have grown increasingly critical of an open-ended, expanding war. Trump has complained about European hesitation to get involved.
In a lengthy post on Truth Social late Wednesday, Trump appeared to distance the U.S. from an Israeli attack on the South Pars gas field. Israel launched the attack, he wrote, “out of anger for what has taken place in the Middle East.”
“The United States knew nothing about this particular attack, and the country of Qatar was in no way, shape, or form, involved with it, nor did it have any idea that it was going to happen,” Trump wrote. He added that Iran “unfairly” attacked a Qatari gas facility in retaliation.
“NO MORE ATTACKS WILL BE MADE BY ISRAEL” on the South Pars field unless Iran attacks Qatar, Trump wrote. In that case, he warned, the U.S. would “massively blow up the entirety” of the gas field with “an amount of strength and power that Iran has never seen or witnessed before.”
“I do not want to authorize this level of violence and destruction because of the long term implications that it will have on the future of Iran, but if Qatar’s LNG is again attacked, I will not hesitate to do so.”
The average price of a gallon of regular gas in the U.S. reached $3.88 on Thursday, according to AAA, up nearly a dollar from a month ago.
Analysts say the full impact of current oil prices hasn’t yet registered at the pump. They are also raising doubts about recent administration assurances that the war will end imminently and markets will quickly stabilize.
After Iran warned early Thursday that it would be attacking five specific Gulf state energy facilities, Rystad Energy warned that oil could quickly hit $120 a barrel and keep rising.
“So far, Iran has largely followed through on its stated actions, which makes this a highly credible threat,” Aditya Saraswat, a Dubai-based senior vice president at Rystad, wrote in an email to reporters. “Beyond the immediate risks to civilians and workers at these facilities, any such attacks would likely push oil prices up by at least another $10 and significantly disrupt supply, particularly across key producers in the Middle East.”
Saraswat noted that Iranian strikes have yet to affect port loadings of fuel in Saudi Arabia, but that could change. If the port of Yanbu was substantially damaged, for example, that “could remove 5 to 6 million barrels per day from the market and potentially push oil prices to $150 or higher.”
The five facilities Iran threatened produce about 20 percent of the liquefied natural gas in the global market. Further disruption of those supplies could lead to major price shocks for Europe and Asia.
“Spot LNG prices, already elevated, could spike to levels not seen since the 2022 energy crisis,” Saraswat wrote. “The more detrimental difference this time around would be that Europe has far less gas storage headroom to absorb the shock.”
Halper and Copp reported from Washington, Craw from London and Shamalakh from Cairo. Dan Lamothe and Emily Davies in Washington and Ellen Francis in Brussels contributed to this report.
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