Crude oil prices flared up as much as 5% on Thursday, extending Wednesday’s gains to trade over $112 per barrel as tensions in the Gulf intensified, with both Israel and Iran targeting energy infrastructure. The escalation comes as the war approaches its fourth week, unsettling global markets.
Crude oil price on March 19
U.S. crude futures rose more than 3% to $99.39 per barrel. Natural gas prices climbed over 5%, while Brent crude touched $111.19 in early trade and extended gains by another 4% this morning to $112 per barrel, moving closer to the initial war peak of $120. U.S. natural gas also jumped nearly 5% overnight.This comes after Iran accused Israel of striking facilities at its South Pars gas field and responded by threatening attacks on oil and gas assets across the Gulf. It launched missiles toward Qatar and Saudi Arabia, declaring energy infrastructure in Saudi Arabia, the UAE and Qatar as legitimate targets. Iran also claimed to have struck an LNG plant in Qatar.
Further, Abu Dhabi halted operations at its Habshan gas facilities after missile interceptions led to falling debris. In Bahrain, LNG assets were reportedly hit by heavy missile strikes, according to Iran’s semi-official Fars news agency.
Qatar’s state energy company said Ras Laffan Industrial City suffered extensive damage following Iranian missile strikes. Saudi Arabia said it intercepted multiple ballistic missiles aimed at Riyadh and foiled a drone attack on a gas facility in the eastern region.
Iran also issued evacuation warnings for energy facilities in Saudi Arabia, the UAE and Qatar, signaling further strikes in the coming hours. The warning followed the attack on South Pars, which Israeli media attributed to Israel with U.S. consent, though neither country confirmed involvement.
Meanwhile, shipments through the Strait of Hormuz have been disrupted. The route accounts for about 20% of global oil and LNG supply. Production losses in the Middle East are estimated at 7 million to 10 million barrels per day, equivalent to 7% to 10% of global demand.
Can oil hit $150?
Looking ahead, crude prices could move higher from current levels. According to Kayanat Chainwala of Kotak Securities, oil may rise to $120 per barrel in the near term and potentially touch $150 if the conflict continues beyond a month and geopolitical tensions remain elevated.Nuvama Institutional Equities echoes the same view. The continued closure of the Strait of Hormuz, which handles around 20 million barrels per day, could push crude prices to the $110-150 per barrel range over the next 4-8 weeks. While the release of strategic reserves may provide some near-term relief, it could also lead to a rebound in demand as inventories are restocked later.
Broader stress is likely to emerge beyond $125 per barrel. Oil marketing companies could see sharp earnings pressure, LPG subsidy burdens may rise significantly, and risks to LNG throughput could increase. In such a scenario, the likelihood of policy intervention also rises. Overall, the first $40 per barrel increase in crude can typically be managed through tax adjustments, but beyond that, the strain on the system becomes more visible, Elara said.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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