Growing Israeli attacks on Iranian oil and gas facilities have raised speculation that the Kharg terminal, which handles an estimated 90 per cent of Iran’s oil exports, could be a key target.
The conflict between the two countries spread from nuclear to energy infrastructure on Saturday as Israel unleashed more air strikes.
The gasfield accounts for nearly 20 per cent of known global reserves of recoverable gas.
Fires also broke out at the Shahran oil depot in the capital city of Tehran and at the Fajr Jam gas plant, one of Iran’s largest processing facilities, after they were hit.
A general view of the Port of Kharg Island Oil Terminal, 25 km from the Iranian coast in the Persian Gulf and 483 km northwest of the Strait of Hormuz, in Iran on March 12, 2017. (Photo by Fatemeh Bahrami/Anadolu Agency/Getty Images)Tony Jordan, senior partner at energy analysts Auxilione, said a potential attack on the Kharg terminal would likely fuel further oil price rises as markets react to the uncertainty over supplies.
He told The i Paper: “The more that companies are exposed to those prices, the more they have to put their prices up in order to maintain [profit] margins.
Mr Jordan said there will probably be an increase in energy prices as markets react to the volatility seen over the weekend.
People watch from a bridge as flames from an Israeli attack rise from Sharan Oil depot, following Israeli strikes on Iran, in Tehran, Iran. Photographer: Majid Asgaripour. Provider: via REUTERS. Source: Wana News Agency
Mr Jordan added if energy and transport costs go up, that is likely to feed into the price of food and other consumer goods, which then increases inflation.
It is possible that other countries could increase oil production to compensate for any disruption to Iranian supplies, which would then limit price rises, Mr Jordan added.
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The price of the benchmark Brent crude rose more than 10 per cent on Friday, reaching its highest level since January, before losing some gains.
She added that “the concerns are around shipping routes, both for oil and gas exports, but also more widely, because as so much goods trade passes through the Middle East, so obviously we’re following this closely.”
The Consumer Prices Index, a measure of inflation, rose from 2.6 per cent in March and was higher than economists had expected.
Attacks by Iran-backed Houthi rebels in the Red Sea also disrupted global supply chains causing higher fuel costs and therefore increase food prices.
Luke Bosdet, spokesman at motoring group the AA, said the jump in oil prices will push up petrol prices that had fallen between February and June.
Mr Bosdet said the extent of price rises will depend on whether retailers price competitively and how much demand for gasoline comes from the US, where the economy has slowed.
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