The international oil market faced fresh volatility on Tuesday as Brent crude rose 3% following Iranian attacks on UAE gas and Iraqi oil fields. The strikes mark a departure from previous tactics, directly impacting the ability of Gulf nations to extract resources. With the war entering its third week, the impact on global energy supplies is becoming increasingly severe.
The UAE’s Shah natural gasfield, a massive pillar of the region’s energy sector, was set ablaze by a drone strike on Monday. Simultaneously, the port of Fujairah and Iraq’s Majnoon oilfield were targeted by missiles. These attacks have resulted in a halving of the UAE’s daily crude output, creating a massive void in the global supply chain.
Fujairah is a critical terminal that typically bypasses the most congested parts of the Persian Gulf, but it is now effectively offline. A projectile strike on a tanker in the Gulf of Oman has further deterred maritime traffic in the region. Iran’s control of the Strait of Hormuz remains the primary bottleneck for nearly a fifth of the world’s energy shipments.
In Asia, the consequences of these disruptions are manifesting as widespread power outages and economic shifts. Sri Lanka has introduced a mid-week public holiday to save fuel, while Bangladesh has altered its university calendar. These measures reflect the desperate need to conserve dwindling energy reserves as the conflict shows no signs of abating.
Market analysts at Goldman Sachs have noted that the refined product market is actually seeing higher rallies than crude oil itself. The loss of medium-heavy crude is particularly damaging for the production of diesel and fuel oil. As the Trump administration navigates the crisis, the focus remains on whether production at the Shah field can be restored.