Brent nears $110/bbl after attack on world’s largest natural gas field in Iran By Investing.com

Investing.com — Oil prices surged on Wednesday, with global benchmark Brent nearing $110 a barrel after an attack to the largest natural gas field in the world shared by Iran and Qatar.

At 10:57 ET (14:57 GMT), advanced 5.8% to $109.51 a barrel, while climbed 2.7% to $98.09 a barrel.

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Qatar condemns attack on Iran’s South Pars field

Iran’s semi-official Tasnim News Agency on Wednesday said the Islamic Revolutionary Guard Corps (IRGC) had listed oil and gas targets in Saudi Arabia, the United Arab Emirates, and Qatar and had warned citizens to keep clear of those locations.

The IRGC’s move came after media reports said facilities in Iran’s South Pars field – the largest natural gas field in the world – had been targeted by the Israeli Air Force. Qatar condemned the attack.

“The Israeli targeting of facilities linked to Iran’s South Pars field, an extension of Qatar’s North Field, is a dangerous & irresponsible step amid the current military escalation in the region,” Qatar’s Ministry of Foreign Affairs said.

“We reiterate, as we have repeatedly emphasized, the necessity of avoiding the targeting of vital facilities,” the Ministry added.

U.S. temporarily waives Jones Act

The attack on the South Pars field comes at a time when the critical Strait of Hormuz, which accounts for roughly a fifth of the world’s oil flows, remains effectively shuttered by Tehran.

Earlier in the day, Iraqi and Kurdish authorities agreed to resume oil exports through Turkey’s Ceyhan port, offering some relief to markets. But the Middle East conflict showed few signs of easing, and the ongoing closure of the Strait of Hormuz continued to boost oil prices.

The spike in oil and gas prices due to the conflict has already hit U.S. consumers. Prices at the gasoline-pump have hit their highest levels since October 2023. Along with being a major factor for American voters in November’s midterm elections, such an increase will also likely play into overall inflation.

Trump on Wednesday issued a decision to waive the Jones Act for 60 days in order to offset disruptions to the oil market. The Jones Act is a more than century-old legislation governing domestic shipping.

“This action will allow vital resources like oil, natural gas, fertilizer, and coal to flow freely to U.S. ports for sixty days, and the Administration remains committed to continuing to strengthen our critical supply chains,” White House Press Secretary Karoline Leavitt said.

Fed decision eyed for commentary on Iran and oil

In light of the massive jump in oil prices since the start of the Iran conflict at the end of February, Wednesday’s Federal Reserve interest rate decision takes on added importance. Any commentary from Fed Chair Jerome Powell on the impact of oil prices on inflation will be closely watched. The Fed is tipped to leave interest rates unchanged at a range of 3.50% to 3.75%.

Powell could offer one of the first insights into how much Fed officials believe the Iran war and its concurrent oil shock could impact rates in the months ahead.

Prior to the start of the conflict, investors had been penciling in a rate cut later this year, possibly in the second half. But the Fed could now signal a delay to reductions, analysts at ING flagged. Elevated interest rates can exert downward pressure on oil prices by cooling global economic activity and strengthening the U.S. dollar, although this relationship has been tested by strained supplies out of the Middle East as the war rages on.

Ambar Warrick and Scott Kanowsky contributed to this article