The targeting of key Gulf energy infrastructure raises the risk of long-term disruption

Escalating attacks on key oil and gas facilities in the Persian Gulf have heightened the risk of prolonged price increases across multiple sectors, from energy and transportation to electronics and food production.

Iran’s recent strikes on Gulf infrastructure, launched in retaliation for an Israeli attack on the South Pars natural gas field, have transformed what began as temporary price shocks at the start of the conflict into potentially long-term economic disruptions.

Gulf nations have already reduced oil production as Iranian strike threats have effectively blocked most tanker traffic through the Strait of Hormuz, leaving producers with limited export options. Industry analysts warn that even if maritime passage becomes safe again soon, the complex process of restarting refineries and related facilities means energy supplies won’t resume immediately. Infrastructure damage from ongoing attacks would further extend recovery timelines.

The disruption has hit Asia particularly hard, as the region receives the majority of oil and gas exports from the Gulf. In the Philippines, government offices have reduced operations to four days per week and implemented air conditioning restrictions. Vietnam has encouraged remote work to conserve energy resources.

Beyond fossil fuels, the conflict has endangered supplies of critical raw materials. Helium, essential for semiconductor manufacturing, and sulfur, a key fertilizer component, face potential shortages that could trigger price increases throughout global supply chains.

The South Pars gas field, shared between Iran and Qatar (where it’s known as North Field), stands at the center of the escalation. As the world’s largest natural gas reservoir, it provides most of Iran’s domestic supply for heating and electricity generation. The Israeli strike on facilities connected to the field at Asuleyah prompted Iranian threats against oil and gas sites across the Gulf region.

For Iran, which already faces periodic electricity shortages, losing South Pars output would significantly worsen civilian living conditions. U.S. President Donald Trump has indicated that Israel would refrain from striking South Pars again but warned of massive retaliation if Iran continued targeting Qatari energy infrastructure.

Qatar’s Ras Laffan liquefied natural gas terminal, the world’s largest LNG export facility, sustained “extensive” damage during Thursday’s Iranian attack. The facility, which had already suspended operations following an earlier drone strike, represents approximately 20% of global LNG production. Its disruption has sent European energy prices soaring.

Iran’s Kharg Island, the terminal handling nearly all of the country’s pre-war crude exports (approximately 1.6 million barrels daily, mostly to China), has been partially spared in military operations thus far. Trump indicated U.S. forces bombed military sites on the island in March while avoiding oil infrastructure, though he suggested petroleum facilities could be targeted next. Some tankers continue loading at Kharg, with evidence of a “dark fleet” employing false signals and obscured ownership to evade sanctions.

Saudi Arabia’s East-West pipeline, connecting the Abqaiq processing center to Yanbu port on the Red Sea, has provided a crucial alternative to the Hormuz route. However, the pipeline lacks capacity to fully compensate for the strait’s closure, and a recent strike on Saudi Arabia’s SAMREF refinery at Yanbu has raised concerns about export capabilities.

The United Arab Emirates’ Fujairah oil terminal, positioned strategically on the Gulf of Oman, enables Abu Dhabi to export significant quantities without transiting the Strait of Hormuz. Despite experiencing two strikes, the terminal has reportedly resumed operations.

Kuwait’s Mina al-Ahmadi and Mina Abdullah refineries experienced fires following drone attacks, though the extent of damage remains unclear. The prolonged shutdown of these facilities could force oil well closures due to the lack of processing capacity, with lengthy restart procedures delaying recovery.

Oman’s Port of Salalah houses an $800 million facility producing liquid petroleum gas primarily for Asian markets, where it serves as essential cooking fuel. The disruption has already forced restaurants in India to reduce operating hours and modify menus to exclude energy-intensive dishes. Despite its location outside the Strait of Hormuz, operations were suspended as a precautionary measure after drone strikes.

Abu Dhabi’s Shah gas field, supplying approximately 20% of the emirate’s natural gas and serving as a major source of sulfur for fertilizer and chemical production, suspended operations Tuesday following a drone strike, further straining regional and global supply chains.