The war between the US, Israel, and Iran has entered a volatile new phase, with direct strikes on oil and gas fields causing prices to surge. Tuesday saw Brent crude reach $103.2, a price point nearly 50% higher than the pre-war baseline. This rally follows reports of major fires and operational shutdowns at key energy sites across the United Arab Emirates and Iraq.
Historically, regional conflicts have seen attacks on “downstream” targets like terminals, but this week’s events targeted the actual source of the fuel. The UAE confirmed that its Shah natural gasfield was struck by a drone, leading to an immediate cessation of work. This facility is central to regional energy stability and its loss is being felt across global wholesale markets.
Maritime safety has also deteriorated, with a tanker recently struck by a projectile near the Port of Fujairah. This port serves as a critical bypass for the Strait of Hormuz, yet it is now under direct fire, further choking off the UAE’s ability to export crude. With the Strait of Hormuz effectively under Iranian control, the global flow of oil is facing its most significant threat in decades.
Financial analysts from Goldman Sachs warn that the “largest oil market shock on record” is currently unfolding. The primary concern is the shortage of medium-heavy crude, which is essential for producing the diesel and jet fuel that powers global trade. This suggests that the cost of shipping and travel may rise even faster than the price of raw crude oil.
The regional crisis is having a domino effect on Asian domestic policies as energy scarcity takes hold. From Thailand’s “no-suit” policy in government offices to Sri Lanka’s mandatory fuel-saving holidays, the continent is in a state of emergency. As operations remain suspended at major fields, the focus remains on whether diplomatic channels can be reopened to prevent a total market collapse.