Brent crude nears $115 after Iran attacks key energy facilities in the Gulf

An explosion erupts from a building following an Israeli strike in central Beirut [AP Photo]

Global energy prices soared yesterday after Iran attacked two oil refineries in Kuwait and a key natural gas facility in Qatar that can supply one-fifth of the world’s liquified natural gas.

The attacks added to fears the energy crisis triggered by the closure of the Strait of Hormuz to tanker traffic may be longer and more extensive than feared, with lasting damage to oil and gas production.

Brent crude, the international benchmark, rose nearly 6% to $113.77 per barrel, up from less than $73 per barrel on the eve of the war. U.S. benchmark crude was less affected by the latest attacks in the Middle East, rising less than 1% to $96.26 per barrel.

The Iranian attack hit the Ras Laffan terminal for shipping out liquefied natural gas in Qatar. Qatar normally supplies some 20% of the world’s consumption of LNG, which can be carried by ship. The facility shut down after a drone attack. The closure of the Strait of Hormuz to most tanker traffic also left the gas with nowhere to go.

If the disruptions from Iran’s attacks on its Gulf Arab neighbors’ energy infrastructure keep oil and gas prices high for long, they could create a debilitating wave of inflation for the global economy.

Markets on Wall Street slipped before the opening bell. Futures for the S&P 500 and Dow Jones Industrial Average each fell a 0.1%, while Nasdaq futures dipped 0.3%.

On Wednesday, the U.S. Federal Reserve opted to leave its benchmark interest rate alone and projected just one more quarter-point cut this year due to ongoing elevated inflation and uncertainty about the ramifications the Iran war will have on the global economy.

Prices for gold and silver also tumbled, dragging down major mining stocks with them. Gold fell 4% to $4,697 an ounce, while silver slipped 8.7% to $70.80. Most industrial metals also saw their prices fall.

Shares in miners Hecla and Newmont slid 7.8%, while Freeport-McMoRan fell 4.6%.

Markets in Europe and Asia were getting hit much harder than U.S. markets.

In Asian trading, Tokyo’s Nikkei 225 fell 3.4% to 53,372.53 as the Bank of Japan also opted to keep its benchmark interest rate on hold at 0.75%, citing the war with Iran as one factor.

In its monetary policy statement the BOJ said that “in the wake of increased tension in the Middle East, global financial and capital markets have been volatile and crude oil prices have risen significantly; future developments warrant attention.”

Higher oil prices are a heavy burden for Japan, which like South Korea and Taiwan depends on imports of most raw materials for industries that rely heavily on oil and its derivatives.

The Kospi in Seoul lost 2.7% to 5,763.22.

In Hong Kong, the Hang Seng slipped 2% to 25,500.58, while the Shanghai Composite index shed 1.4% to 4,006.55.

Australia’s S&P/ASX 200 lost 1.7% to 8,497.80 and Taiwan’s Taiex fell 1.9%. In India, which has also suffered from shocks to supplies of oil and gas, the Sensex lost 2.7%.

“The combination of higher oil, rising U.S. yields, and a stronger dollar is acting as a macro wrecking ball across Asian assets and currencies,” Stephen Innes of SPI Asset Management said in a commentary.

Shell’s assessing damage in Qatar

Energy firm Shell PLC says it is assessing the damage after Iran launched attacks on Qatar.

Shell said it was looking at the damage at the Pearl gas-to-liquids plant at the Ras Laffan liquefied natural gas facility after it was hit by Iranian missiles. It said all staff on site are safe after the attack.

“We are currently assessing any potential damage to Pearl GTL and working with Qatar Energy and the relevant authorities to understand the damage to the wider Ras Laffan Industrial City facilities,” it said.

Macron, Merz condemn escalation

Emmanuel Macron has also called for a truce as the Middle East enters a religious holiday at the end of the Islamic holy month of Ramadan. “The fighting should stop for a few days to try to give negotiations another chance,” Macron said in Brussels ahead of a meeting of European Union leaders. He said France is pushing for a moratorium on attacks against civilians and civilian infrastructure.

Chancellor Friedrich Merz is underlining his insistence that the war must end before his country can help with matters such as keeping shipping lanes clear.

Merz said Thursday that “we can and will commit ourselves only when the weapons fall silent.” He added that “we can then do a great deal, as far as opening sea lanes and keeping them clear, but we’re not doing it during ongoing combat operations.”

He said an international mandate that doesn’t yet exist also would be needed, and “there are still many steps ahead of us before we can even consider such an issue.” ELAINE KURTENBACH & DAVID MCHUGH, MDT/AP