The U.S.-Israel war with Iran, which began on February 28, initially remained contained within familiar limits: military assets, nuclear facilities, and senior leadership were the primary targets. That restraint has now broken, as the war shows no sign of ending. With strikes on critical energy infrastructure, the conflict has entered a far more dangerous phase, directly threatening regional stability and global energy markets.
The shift became explicitly clear on March 18, when Israel attacked Iran’s South Pars gas field, hours after killing Iran’s intelligence minister, Esmail Khatib, in a strike on Tehran.
The South Pars Strike
On Thursday, March 18, the Israeli Air Force hit a natural gas processing facility in southwestern Iran. This marked the first time in the twenty-day war that Israel directly targeted Iran’s natural gas infrastructure, a sector central to the country’s economy and daily functioning. Israeli officials indicated that the operation had been coordinated with Washington, though U.S. President Donald Trump denied any direct involvement. Reports in the Wall Street Journal suggested that he had been briefed in advance and saw the strike as a strategic signal to Tehran amid tensions over the blockade of the Strait of Hormuz.
The targeted South Pars gas field, along with Qatar’s North Dome, forms the largest natural gas reservoir in the world. The field holds an estimated 1,800 trillion cubic feet of gas, making it central to global supply. Iran’s portion accounts for roughly 36% of its total proven gas reserves. South Pars is shared by Iran and Qatar. It is located near the Iranian coastal city of Asaluyeh.
South Pars produces the bulk of Iran’s natural gas. It is the single most important source for the country’s domestic energy, and estimates suggest it accounts for roughly 70 to 80% of the country’s total gas production.
This output feeds directly into Iran’s internal energy system. Around 94% of Iran’s gas is consumed domestically, with limited export capacity. Gas from South Pars supplies power plants, residential heating, and energy-intensive industries such as petrochemicals and manufacturing.
Because of this dependence, even partial disruption at South Pars creates immediate constraints. Reduced output will affect electricity generation, limit industrial activity, and force the government to divert supply from exports to domestic use. Iranian gas flows to Iraq have already been halted: 40% of Iraq’s gas and power needs are met through Iran’s supply. Iranian state media reported that many facilities were damaged, although no casualties were immediately confirmed, and a fire at the gas field was brought under control.
Why is this a Significant Escalation?
The operation marks one of the first reported strikes on Iranian energy infrastructure since the war began, risking the exacerbation of an already unprecedented disruption to global energy flows through the Strait of Hormuz. Until this point, both the U.S. and Israel had largely spared Iran’s oil and gas sector in an effort to contain global price shocks, making this a significant development.
U.S. Defence Secretary Pete Hegseth said at a Pentagon briefing that the South Pars strike was deliberate signalling. “Iran has weaponised energy for decades. Israel clearly sent a warning.” And urged Iran against continuing its retaliatory strikes on energy sites across the Gulf.
Iran’s Response
Iranian officials stated that there would be “ZERO restraint” if its energy infrastructure was targeted again. Foreign Minister Abbas Araghchi wrote on X: “Our response to Israel’s attack on our infrastructure employed [a] fraction of our power. The only reason for restraint was respect for the requested de-escalation. Zero restraint if our infrastructures are struck again.”
Iran followed these statements with evacuation warnings. The Islamic Revolutionary Guard Corps urged people to leave areas near key energy facilities in Saudi Arabia, the United Arab Emirates, and Qatar, identifying the SAMREF refinery and Jubail petrochemical complex in Saudi Arabia, the Al Hosn gas field in the UAE, and the Mesaieed petrochemical complex and Ras Laffan refinery in Qatar as potential targets.
Iran struck Ras Laffan Industrial City in Qatar, where state-owned QatarEnergy reported significant damage. Two refineries in Riyadh were also hit. Saudi Arabia responded by stating that it reserved the right to take military action if necessary. Israel too confirmed damage to the Bazan Group refinery in Haifa in what it described as an Iranian strike.
Why Ras Laffan Matters?
Ras Laffan is the processing and export hub through which virtually all of Qatar’s North Dome gas passes on its way to global markets. About a fifth of global LNG supply comes from Qatar. Qatar has reported that the attack has disrupted its export capacity, with damage expected to have a long-term impact, although the facility has been largely shut since March; a delay to reopen could significantly impact the price and supply of LNG worldwide.
QatarEnergy is the world’s largest LNG producer. The attack on the facility caused extensive damage, and several other LNG facilities had also been struck, which caused sizeable fires and extensive damage. Qatar’s energy minister, Saad al-Kaabi, said the strikes knocked out 17% of the country’s LNG export capacity, with damage expected to sideline roughly 12.8 million tonnes per year of output for three to five years. Qatar’s Ministry of Foreign Affairs said in a statement on March 18, “The State of Qatar expresses its strong condemnation and denunciation of the blatant Iranian attack targeting Ras Laffan Industrial City, which caused fires resulting in significant damage to the facility.”
The Market Impact
Oil prices rose sharply following the South Pars strike, with Brent crude climbing above $108 per barrel and U.S. West Texas Intermediate trading near $98. Prices continued to edge toward $110 as strikes on energy infrastructure across the Middle East unsettled markets.
Where Things Stand
Israeli Prime Minister Benjamin Netanyahu, on March 20, said that Israel “acted alone” in striking Iran’s South Pars gas field and confirmed that Donald Trump had asked him to hold off further attacks on such energy infrastructure.
Closure of the Strait of Hormuz was already driving up energy prices, as oil and gas already produced could not reach their intended customers on time. The new wave of attacks against energy facilities has put pressure on global supply, a double blow that has sent prices for both oil and natural gas even higher. French President Emmanuel Macron, speaking after calls with the Qatari Emir and Trump, urged all parties to immediately implement a moratorium on strikes targeting civilian infrastructure, particularly water and energy facilities.
There is still no clarity on whether the call will be heeded. It is clear, though, that the conflict has entered its energy phase, which is likely to cause disruption far beyond the immediate target.