A recent escalation in attacks on energy infrastructure across the Middle East has worsened the fuel supply squeeze that began when fighting disrupted shipments through the Strait of Hormuz. Consumers had hoped that reopening the strait would quickly ease prices, but a wave of strikes on refineries, terminals and pipelines has undercut that prospect, analysts say.
Damage to processing and export facilities could take months or years to repair, prolonging a global fuel shortage and raising the risk of a lasting oil shock that would compound pressure on the U.S. economy. Higher fuel and diesel costs would strain households already coping with elevated inflation and a tight labor market and would increase costs throughout supply chains.
UC Berkeley business and public policy professor Severin Borenstein warned that attacks on infrastructure have intensified and that this escalation is broadly harmful for economies and consumers.
The recent campaign of strikes followed an Israeli attack on Iran’s largest gas field, prompting Iran to retaliate at energy sites in neighboring Gulf states. Among the most consequential was an attack on Ras Laffan in Qatar, the world’s largest liquefied natural gas (LNG) export complex — the most significant strike on Qatari facilities since the conflict began.
U.S. policy steps to ease oil-market pressures have included releases from the Strategic Petroleum Reserve, relaxed limits on some Russian oil sales and a pause on a domestic oil-transport regulation. Nevertheless, attacks on regional energy infrastructure pushed global crude briefly up to about $119 per barrel before settling near $109, and prices climbed more than 50% over roughly a month.
At the retail level, U.S. gasoline averaged $3.91 per gallon, up about $0.98 from the prior month, according to AAA. Diesel prices have jumped as well, threatening higher transportation and production costs that would feed into prices for food, clothing and other goods.
University of Tennessee petroleum expert Timothy Fitzgerald noted that even if fighting stopped immediately, restoring damaged plants and terminals to full capacity would take time. The longer key energy inputs remain more expensive, he said, the greater the strain on the broader economy.
Inflation has eased from earlier peaks but remains around 2.4%, slightly above the Federal Reserve’s 2% target. QatarEnergy estimated the Ras Laffan strike trimmed roughly 17% of Qatar’s export capacity and cost the country about $20 billion in annual revenue; the company warned repairs could take as long as five years. Ras Laffan typically handles about one-fifth of global LNG shipments.
Iran also struck sites in Israel, Kuwait and the United Arab Emirates, among others. Analysts caution that the cumulative destruction could reduce worldwide production capacity and slow overall output.
Borenstein and other experts point out that while the United States is in a stronger position than many countries because it is a net oil exporter, domestic prices remain linked to global markets and are vulnerable to international supply disruptions.
Rebuilding work is likely to be delayed until hostilities subside and damaged sites can be secured. Even after reconstruction, persistent geopolitical risk and the possibility of renewed strikes could keep price volatility and uncertainty elevated, noted international economics scholar Robert Weiner. That heightened uncertainty itself is an added economic burden, complicating investment and planning decisions for energy firms and other businesses.