Iran issued a stark warning last night, signaling its intent to destabilize the global energy market through intensified missile strikes targeting oil and gas installations, potentially igniting a ‘full-scale economic war.’
Amid escalating tensions in the Middle East, neighboring Gulf nations began evacuating their facilities following threats from the Iranian regime to launch attacks ‘within the coming hours.’
This development came in the wake of an Israeli airstrike on South Pars, the world’s largest natural gas field located in Iran. The ensuing infernos prompted Qatar, which co-manages the field, to denounce the strike as a ‘dangerous and irresponsible’ move jeopardizing global energy security.
In response, oil prices surged by five percent, with markets reacting to Iran’s new leader announcing that energy infrastructures in Saudi Arabia, the United Arab Emirates, and Qatar are now ‘direct and legitimate targets.’
Eskandar Pasalar, an Iranian regional governor, declared, ‘The pendulum of war has shifted towards a full-scale economic conflict.’
In the UK, fuel prices have reached their highest point in over 18 months. Compounding the economic strain, former U.S. President Donald Trump authorized foreign-flagged vessels to transport fuel into America.
Yesterday Keir Starmer warned the longer the crisis went on, the worse its impact will be on the cost of living.
Plumes of smoke and fire rise after debris from an intercepted Iranian drone struck an oil facility in Fujairah, United Arab Emirates last week
A refinery in Iran’s South Pars gas field is seen after it was previously struck by an Israeli drone in Kangan, in Iran’s Bushehr province
Yesterday Keir Starmer warned the longer the crisis went on, the worse its impact will be on the cost of living
On another dramatic day in the Middle East:
- Iran’s new Supreme Leader Mojtaba Khamenei swore revenge after several of the Islamic regime’s chiefs were assassinated in US-Israeli bombardments;
- The World Health Organisation warned it was preparing for the possibility of nuclear weapons being used in Iran;
- The US Federal Reserve said the war would hike inflation and hit ‘disposable personal income’;
- At least 12 people were killed in Beirut as Israel stepped up its bombing raids;
- The Ministry of Defence revealed that British pilots and gunners had destroyed more than 40 Iranian drones.
It comes as the Royal Navy revealed it is unwilling to send warships to the Middle East as the situation is ‘too fluid’.
Yesterday’s attack on the Pars gas field is the first reported strike on Iranian energy infrastructure since the war began at the end of last month.
Iran, which accuses Gulf states of allowing US forces to conduct attacks from their territories, lashed out with a fresh salvo of missiles, including one which struck an airbase housing British and Australian troops in the UAE, while others hit the Saudi Arabian capital Riyadh.
It will only add to fears over an energy supply crunch which is already being described as the biggest ever – surpassing the 1970s oil crisis.
At the heart of the crisis is the closure of the Strait of Hormuz, through which a fifth of the world’s oil and gas passes – choking off up to 10million barrels of oil a day.
That has already sent oil prices surging from $72 before the war to nearly $110 and prompted Iran to tell the world to get ready for $200 a barrel.
Danni Hewson, head of financial analysis at investment platform A J Bell, said: ‘Iranian threats of retaliation against regional energy infrastructure after Israeli strikes on its massive South Pars gas field have helped dial up the temperature once again.
‘Any solution to the blockage of the Strait of Hormuz looks pretty distant at this point and unless and until there is progress on that front, energy markets will likely remain volatile.’
President Trump last night stoked the international war of words by threatening that the US could abandon the security of the Strait of Hormuz shipping lane to countries, including the UK, that had ‘failed’ to respond to his demand for warships to secure the waterway.
The US President claimed such an action ‘would get some of our non-responsive ‘Allies’ in gear, and fast!’
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How should Britain respond if soaring oil prices push the cost of living even higher?
President Trump last night stoked the international war of words by threatening that the US could abandon the security of the Strait of Hormuz shipping lane (file image)
In a post on his Truth Social platform, he taunted European nations: ‘I wonder what would happen if we… let the countries that use it – we don’t – be responsible for the so-called ‘Straight?’
As oil prices rose, the White House announced a pause in a 100-year-old shipping law known as the Jones Act which requires goods to be moved on US flagged vessels.
It has been blamed for making energy more expensive and, in a sign the economic pain is biting, Mr Trump authorised a 60-day suspension which will allow foreign-flagged ships to transport goods including fuel.
At Prime Minister’s Questions yesterday, Sir Keir defended his approach, insisting he would not allow UK forces to be drawn into a ‘wider war’. He has so far resisted Mr Trump’s demands for the Royal Navy to deploy to the strait.
The UK has sent air defence destroyer HMS Dragon to help defend Cyprus from drones and missiles but the vessel is making slow progress.
The US has ordered a ‘911 force’ of 2,500 marines to be redeployed from Japan to the Middle East, signalling the possibility of American soldiers’ boots on the ground in Iran. Iran’s deputy foreign minister said that would be a ‘reckless’ move and his country would fight for as long as is needed.
Meanwhile, latest figures from the RAC show the average price of a litre of petrol has climbed by 10p to nearly 143p since the start of the war. Diesel is up by 20p to nearly 163p.
Government borrowing costs also rose yesterday as investors dumped UK bonds, known as gilts. Bonds across the world have been affected by the Middle East turmoil, but Britain’s are seen as especially vulnerable because it has the highest inflation among the G7 group of advanced economies.
Traders are also jittery about the possibility of a government bailout for household energy customers along similar lines to the subsidies given to bill payers when prices spiked at the start of the Ukraine war.
Thomas Pugh, chief economist at accountancy firm RSM UK, said that together with the country’s ‘weaker economic backdrop’, it meant Britain ‘is more vulnerable to shocks than many comparable countries’.
