Unlock Editor’s Digest Lock for Free
FT editor Roula Khalaf will select your favorite stories in this weekly newsletter.
A series of Israeli attacks on Iran’s oil and gas facilities threaten further disruption in the market as they are concerns about increased escalation in regions that hold half of the world’s oil reserves.
What was the hit?
On Saturday, Israel crashed into two gas processing facilities on Iran’s southern coast, processing gas from South Purs, the world’s largest natural gas field.
South Pur is extended approximately 4,000 square miles to Qatar, beneath the Persian Gulf, where it is called North Field.
One of the field’s offshore platforms suspended production after the attack, but were reported to be unaffected. The facility takes gas from the field and processes it into methane for use in households, and is made from liquefied petroleum gas (LPG) and ethane, a raw material for petrochemical plants.
Israel also attacked Sharan fuel and gasoline depots in a middle class neighbourhood in North Tehran, and Shar Lei’s storage tanks south of the city.
Some content could not be loaded. Please check your internet connection or browser settings.
Shana News Agency reported that the situation at the Oil Depots in Southpursfield and Tehran is “fully under control.” It added that the level of fuel at the Tehran facility was “low” during the attack.
A spokesman for the Tehran Fire Station said the fire seen in Sharan was caused by another unknown oil derivative, not a gasoline explosion.
Officials at Shahid Tondguyan Petrochemical Plant and Tabriz Oil Refinery denied that both had been attacked.
What is the impact?
The attacks are trying to create shortages rather than Israel weaken and destroy Iran’s domestic gas and fuel supply chains and pursue oil and gas production and exports of countries that are shaking the market.
The country’s largest refinery is located in Abadan, near the Iraqi border at the mouth of the Persian Gulf, and can process 500,000 barrels of crude oil a day.
Israel attacked two gas processing facilities on Iran’s southern coast.
What is the impact on the energy market?
Although there has been no previous impact on Iran’s oil exports, escalation of conflicts to energy infrastructure can cause investors to worry. The concern is that Iran could retaliate by passing a third of the world’s ocean oil by attacking energy targets in other Gulf countries such as Saudi Arabia and the United Arab Emirates, or by blocking oil and gas flows through the Strait of Hormuz through narrow channels that separate Iran from the Gulf countries.
The oil market closed over the weekend and reopened on Monday mornings in Asia.
Some content could not be loaded. Please check your internet connection or browser settings.
How will Iranians retaliate?
Israel’s own energy infrastructure is vulnerable. On Sunday, Bazan, one of Israel’s largest oil refineries in Haifa, said its pipeline and power lines to the North Port City complex were damaged by an Iranian missile attack.
The refinery remains operating, but he said “a downstream facility within the complex has been closed.” He said there were no injuries or casualties. Bazan’s stock fell 1.3% in Sunday morning trading.
Israel has also closed the gas fields at Kalish and Leviathan as a precautionary measure, but other gas fields are in operation. The country’s electricity grid is not connected to its neighbors, and Israel relies on natural gas for around 70% of its generation.
Meanwhile, Iran has repeatedly threatened to close the Strait of Hormuz in the past. Most analysts think this is highly unlikely. This is because oil disrupts all countries in the route-dependent regions and China, Iran’s biggest customer.
So far, there have been few signs of confusion, but Iran could begin to target certain vessels passing through the channel. In April 2024, Iranian commanders boarded and seized MSC Aries, a vessel vessel they claim to be linked to Israel.
