Israels strike on Irans South Pars gas field and Tehrans response signal a shift from bombing bases to targeting the backbone of global gas supply

Israel's recent strike on Iran's South Pars gas field and Tehran's retaliation on key energy infrastructure in several Gulf countries is more than just another escalation of the war roiling the Middle East.

What began as a campaign of decapitation strikes and basetobase missile exchanges has escalated into dueling attacks on energy infrastructure that risks igniting a major energy crisis globally whose effects could reverberate for years.

RT takes a look at what this ominous development means for energy markets and how close the world may be to a full-blown crisis.

Here's why these attacks matter globally

Although the natural gas reservoir housing South Pars is the world's largest, Iran's ability to export gas is limited by sanctions. Therefore, damage to the field or related facilities is mainly a domestic issue. The majority of the gas extracted from South Pars goes to the domestic market, although some is exported to Iraq and Türkiye.

Israel struck the South Pars field and the infrastructure that services it at the nearby Asaluyeh processing hub on March 18. Iran retaliated with strikes on Saudi Arabia, the UAE and, most critically, Qatar's Ras Laffan Industrial City, the world's largest LNG export hub.

Getty Images / Anadolu / Contributor

More concerning globally is not the South Pars strike but the retaliatory attack against the LNG hub at Ras Laffan. This is where the gas from the North Field, which is the Qatari side of the same reservoir that South Pars taps, is processed. The North Field - also called the North Dome - is responsible for about 20% of global LNG supply, practically all of which is processed at Ras Laffan. Qatar has admitted that the attacks caused "significant damage."

While the complex had already been largely shut since early March due to the war, analysts at Wood Mackenzie now warn that damage to the hub could delay any restart and "fundamentally reshape the global LNG outlook."

Rising LNG prices would be particularly bad news for Europe, which has become heavily reliant on LNG in light of its rejection of Russian pipeline gas. Other major consumers of LNG include Japan, Türkiye, and India. The US, as a LNG exporter, would benefit from rising prices.

The damage could be long term

Importantly, unlike many other leading gas fields, the geologically unified reservoir feeding South Pars and the North Field is only at 10% depletion, meaning 90% of the gas is still there. The significance of this cannot be overstated. The gas from the world's largest reservoir - and one expected to play a critical role in meeting future global demand - may not be extractable if the infrastructure on both sides is destroyed. This becomes an issue not just of near-term prices but the state of structural physical supply.

Any sustained disruption to Qatari production would reverberate across the global gas market. Losing even part of Qatari output for an extended period would tighten supply, drive prices higher, and leave importdependent economies scrambling for alternatives.

Unfortunately, alternatives may be scarce. The LNG market was tight even before the war. US LNG export capacity was already near its limits, meaning the country's ability to offset lost Persian Gulf supply is constrained.

Meanwhile, repairing damaged LNG facilities is a highly complex and costly undertaking that could take years. Projects implemented in the Ras Laffan Industrial City cost $70 billion to build, according to Qatar News Agency.

So even if a ceasefire is reached today, the damage already sustained could reverberate for years.

Global markets under strain

Energy prices have surged due to the conflict in general and even more so in light of the attack on South Pars and the Iranian retaliation. This also comes as the Strait of Hormuz, a critical artery that carries about a fifth of the world's seaborne oil, remains essentially closed.

The South Pars-Ras Laffan strikes drove European benchmark gas prices up about 35% in a single day. Oil prices rose more than 5%. Tehran's suspension of gas exports to Iraq and potential cuts to supplies for Türkiye threaten to tighten regional markets further, while Qatar's warning that it may declare force majeure on longterm LNG contracts - including deliveries to Europe and Asia - raises the prospect of a cascading supply shock.

Any prolonged outage at South Pars or Ras Laffan risks tightening markets dramatically. Market observers now warn that disruptions of this scale are likely to keep gas prices elevated for months rather than weeks. "These are physical supply changes... You can't print molecules," economist and former global head of commodities at Goldman Sachs Jeff Currie told Bloomberg.

Precisely for this reason, despite the surge in prices, some analysts argue that markets are still not pricing in more negative scenarios - some of which already seem to be coming to pass. Markets have thus far mostly been concerned with transportation risks and bottlenecks rather than long-term, structural supply constraints. If markets begin to see serious longer-term supply risks regardless of how long the war lasts, prices will surge further.

Where Russian energy fits in

Commenting on the latest developments, Kremlin envoy Kirill Dmitriev has described the situation as a "tipping point," writing on X that "the world understands the necessity of including Russian energy in a diversified energy portfolio for every country." He also cautioned that EU gas prices in 2026 "will be more than double the original forecast." President Vladimir Putin has warned that Moscow could halt gas supplies to the bloc ahead of Brussels' planned 2027 ban.

The EU, already struggling with the consequences of its decision to sever energy ties with Russia over the Ukraine conflict, as well as its controversial green-transition policies, now faces a Middle East shock that few in Brussels seem to have factored into their planning. So far, Europe seems determined to stick to its rejection of Russian gas, but that commitment could waver if costs further mount.

The US has already provided sanctions waivers for Russian energy in light of the conflict, a large concession given its strong-arming just a few months ago of countries such as India over purchases of Russian oil. Several Asian governments have already been scrambling to pick up Russian crude.

Could this become a fullscale global energy crisis?

In many ways, it already is. The world's largest gas field is under attack from both sides, while the Strait of Hormuz is practically shut. Major Gulf LNG and refining hubs have been hit or threatened, while US and NATO leaders are openly discussing military options to reopen shipping lanes.

Analysts warn of the risk that the Middle East war morphs into a full-blown energy crisis. Mohit Kumar, an economist at the investment bank Jefferies, noted in a client briefing, cited by CNN, that Israel's decision to hit South Pars shows that, "as the war drags on, any red lines are likely to get blurred." The question now is how long the world will be able to absorb repeated shocks to the system that keeps the lights on and economies running.

The latest OPEC+ production data, released on March 16, shows around 8.5 million barrels per day confirmed shut in across the Gulf, as percalculationsby analyst Rory Johnston, representing 8% of global daily oil demand. By comparison, the oil immobilized by the 1973 embargo, which lasted for five months and saw no infrastructure destroyed, accounted for about 7% of global oil consumption. Nevertheless, the economic disruption reverberated for much of the rest of the decade.

What makes this escalation uniquely dangerous is that it threatens not just current flows, but future production capacity from one of the world's most critical undepleted reserves.

(RT.com)