Europe and Japan ready to help stabilise energy prices and secure oil chokepoint

Summary

• Israel attacked Iran's South Pars gas field on March 18, prompting Iranian retaliation against energy facilities in Qatar and Saudi Arabia.
• Trump stated Israel will cease attacks on South Pars but the US will "massively blow up" the field if Iran attacks Qatar, threatening further escalation.
• Rising tensions caused Brent crude prices to increase by 4% and Asian stock markets to decline, with potential US troop deployment being considered.

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DOHA/RIYADH – Leading nations in Europe, with Japan, said on March 19 they would act to stabilise energy markets and join “appropriate efforts” to open the Gulf’s oil chokepoint after tit-for-tat strikes on energy plants dramatically escalated the US-Israeli war on Iran.

Major economies have been scrambling to cushion the impact of soaring oil prices after state oil giant QatarEnergy reported “extensive damage” from Iranian missile strikes on the Ras Laffan Industrial City in response to Israel’s bombing of Iran’s major gas field.

Ras Laffan processes about a fifth of the world’s liquefied natural gas.

Qatar’s Foreign Ministry called the assault “a dangerous escalation, a flagrant violation of state sovereignty”. The ministry said it had asked Iran’s military and security attaches and their staff to leave Qatar within 24 hours.

Saudi Arabia’s main port on the Red Sea, where it has been able to divert some exports to avoid Iran’s closure of the Gulf’s Strait of Hormuz, was also attacked.

Saudi Arabia said it intercepted and destroyed four ballistic missiles launched by Iran towards Riyadh.

Foreign Minister Prince Faisal bin Farhan later said Saudi Arabia is considering taking “military action” in response to repeated missile and drone attacks from Iran.

In Kuwait, state media said a drone attack on March 19 caused a “limited fire” at Mina Al-Ahmadi, a major oil refinery operated by the Kuwait National Petroleum Company. The fire has been put out and there were no injuries, the Kuwait News Agency said.

The seemingly precise strikes underscored Iran’s continued ability to exact a heavy price for the US-Israeli campaign, and the limits of air defences in protecting one of the Gulf region’s most valuable and strategic energy assets.

They also suggested a lack of coordination of strategy and war aims almost three weeks into the war.

US Defense Secretary Pete Hegseth, however, told a briefing that US objectives in the war were “unchanged, on target and on plan”.

The leaders of Britain, France, Germany, Italy, the Netherlands and Japan issued a joint statement urging “an immediate comprehensive moratorium on attacks on civilian infrastructure, including oil and gas installations”.

“We express our readiness to contribute to appropriate efforts to ensure safe passage through the Strait,” they added.

“We will take other steps to stabilise energy markets, including working with certain producing nations to increase output.”

Meanwhile, US President Donald Trump pressed for a de-escalation of attacks on Middle East energy sites after the strikes on major gas fields jolted global markets.

Mr Trump said Israel will stop attacking the massive South Pars gas field that Iran shares with Qatar, but he also threatened to “massively blow up” Iran’s portion of the gas field if Tehran attacks Qatar’s side of it.

Israel carried out an attack on South Pars – the world’s largest natural gas deposit – on March 18.

Mr Trump claimed to have no knowledge of the attack, but three Israeli officials said on March 19 said it was coordinated with the US but will likely not be repeated.

The Israeli officials, who spoke on condition of anonymity, said that Israel was not surprised by Mr Trump’s comments.

They described the dynamic as similar to one that played out after Israel struck fuel depots in Iran several weeks ago. After those attacks, Mr Hegseth said that in “that particular case those weren’t our strikes”.

As attacks energy facilities across the Middle East continue, Brent crude prices jumped above US$119 a barrel on March 19.

Stocks fell on March 19 across Asia, where countries import vast quantities of oil and gas.

The Nikkei 225 in Japan ended down 3.38 per cent. The Hang Seng Stock Index in Hong Kong dropped over 1.87 per cent, while the Shanghai Composite shed 1.39 per cent, and South Korea’s Kospi fell 2.73 per cent.

European shares slipped as the conflict in the Middle East sapped risk appetite while markets awaited the European Central Bank’s monetary policy verdict.

The pan-European STOXX 600 was down 1.3 per cent at 590.43 points by 0809 GMT (4.09pm Singapore time), with industrials being the biggest drag on the benchmark.

London stocks were down 1 per cent ahead of the Bank of England’s interest rate decision.

Futures for the S&P 500 pointed to a slight increase when stocks resume trading in the United States. The S&P 500 fell 1.4 per cent on March 18, bringing its loss since the war began to 3.7 per cent.

With de-escalation nowhere in sight, Mr Trump is considering sending thousands more US troops to the Middle East, according to a US official and three people familiar with the planning.

Those troops could be used to restore the safe passage of oil tankers through the Strait of Hormuz, a chokepoint for a fifth of the world’s oil trade.

Ministers denounce Iran attacks

The foreign ministers of 12 Muslim-majority countries meeting in Riyadh denounced Iran’s strikes across the Gulf and called for an immediate halt.

Tehran’s targeting of residential areas and civilian infrastructure, such as oil facilities, airports and desalination plants, could not be justified under any circumstances, the ministers said in a statement.

“This pressure from Iran will backfire politically and morally, and certainly we reserve the right to take military actions, if deemed necessary,” Prince Faisal, Saudi Arabia’s foreign minister, told reporters.

Interceptors were seen fired from near the Riyadh hotel where the conference was held around the time the ministers gathered for the consultative meeting on the Iran war.

The United Arab Emirates shut down its Habshan gas facility after it intercepted missiles fired in what its Foreign Ministry called a “terrorist attack” by Iran.

More than 3,000 people have been killed in Iran since the US-Israeli attacks began on Feb 28, the US-based Iran human rights group HRANA estimates. REUTERS