Middle East War Freezes US Oil & Gas Deals As Global Prices Hit $120

A wave of attacks on oil and gas sites across the Middle East has sent global crude prices soaring to nearly $120 a barrel, freezing U.S. energy deals and pushing American gas prices close to $4 a gallon. The tit-for-tat strikes have hit energy sites in Israel, Kuwait, and the UAE, while also clogging the Strait of Hormuz, a critical waterway for global oil shipments.

Iran struck Qatar’s Ras Laffan LNG terminal, the world’s largest. Israel had previously hit Iran’s largest gas field. The Ras Laffan attack cut Qatar’s LNG export capacity by 17%. The facility normally ships one-fifth of the world’s LNG. Repairs could take up to five years, and Qatar’s lost output could set global LNG supply back to 2021 levels.

Global crude hit $119 per barrel Thursday before easing to $109 by Friday afternoon. That’s a more than 50% rise over the past month. U.S. gasoline prices jumped 98 cents in one month to $3.91 per gallon, according to AAA data. Diesel prices are rising fast, too, which threatens to push up costs for groceries and clothing since diesel powers the U.S. supply chain.

The energy shock is hitting the U.S. economy at a tough time. Inflation’s already at 2.4%, above the Fed’s 2% target. Higher energy costs could push prices even higher across the board. The U.S. is a net oil exporter, but it’s still vulnerable to swings in global markets. Security analysts warn that real-time threat detection tools are increasingly being used to monitor cyberattacks targeting critical energy infrastructure amid the ongoing conflict.

Inside the U.S., the Permian Basin’s pipeline limits have pushed Waha Hub gas prices to a negative $7.79 per MMBtu. New pipeline expansions aren’t expected until 2026. Still, U.S. LNG exports are gaining as Qatar’s outage creates an opening. If Permian pipeline constraints prevent supply from reaching export terminals, Haynesville gas production is expected to fill the gap, though at higher costs that could push domestic gas prices up further.

Major companies including BP, TotalEnergies, Halliburton, KBR, and SLB have pulled nonessential workers from Iraq. That’s slowing field development and delaying output. Talks between ExxonMobil and Chevron to reenter Iraq and take over Lukoil operations have stalled. Repairs and new deals won’t move forward until the fighting stops and sites are secured. QatarEnergy has estimated losses of $20 billion in annual revenue as a direct result of the Ras Laffan attack.