Oil may reach US$120 a barrel if Iran hits 5 key facilities, says analyst

 The five facilities collectively account for roughly 20% of global LNG trade.

Oil prices are currently above US$110 per barrel, the spike driven by escalating tensions in the Middle East and risks to shipping in the Strait of Hormuz. (Reuters pic)

KUALA LUMPUR:

 Oil prices could hit US$120 per barrel if Iran follows through on its threat to strike five facilities in Saudi Arabia, the United Arab Emirates (UAE) and Qatar, with Asia expected to bear the brunt due to its reliance on Qatari supplies, an analyst said.

Rystad Energy senior vice-president Aditya Saraswat said a successful strike would not only disrupt condensate refining but also threaten the operational continuity of liquefied natural gas (LNG) plants supplying Europe, Japan, South Korea and China under long-term contracts.

He said Iranian authorities had warned that five facilities across Saudi Arabia, the UAE and Qatar “will be targeted in the coming hours,” in response to Israel’s attacks on its massive offshore South Pars natural gas field yesterday.

Oil prices are currently above US$110 per barrel, the spike driven by escalating tensions in the Middle East and risks to shipping in the Strait of Hormuz.

Aditya said at least 700,000 barrels per day of refined product capacity could be removed from global markets overnight if the facilities were hit, disrupting supplies of diesel, jet fuel and naphtha.

The facilities are Saudi Arabia’s SAMREF refinery and Jubail petrochemical complex; the UAE’s Al Hosn gas field; Qatar’s Ras Laffan refinery and the Mesaieed petrochemical complex and holding company.

“So far, Iran has largely followed through on its stated actions, making this a highly credible threat.

“Any disruption would not only affect regional supply but also ripple through global LNG markets, with Asia bearing the brunt given its dependence on Qatari volumes,” he said.

Aditya said the five facilities collectively account for roughly 20% of global LNG trade, up to 10% of Asia-Pacific’s naphtha imports, and more than 6% of global polyethylene capacity.

He added that although Saudi Arabia had already been hit by strikes, oil loadings remain unaffected – a critical factor for the market.

Any disruption to key infrastructure, such as the port of Yanbu, could remove five million to six million barrels per day from global supply and potentially push oil prices to US$150 per barrel or higher. - FMT