Fires rage across multiple phases of Iran’s South Pars gas field, the world’s largest natural gas reserve, following a coordinated strike by Israeli forces with U.S. approval and coordination. The attack, reported on March 18, 2026, targeted processing facilities in the onshore Asaluyeh hub and offshore installations in Bushehr Province, igniting major blazes and forcing critical phases—specifically phases 3, 4, 5, and 6—offline. Emergency teams worked to contain the fires, but the damage has halted significant portions of production and processing capacity at this shared field (with Qatar’s North Dome section). This marks a major escalation in the ongoing U.S.-Israeli military operations against Iran, shifting focus from military and nuclear sites to economic infrastructure vital to the Islamic Revolutionary Guard Corps and Iran’s domestic energy supply.

The strike has disrupted gas flows to neighboring countries like Iraq, exacerbating regional energy shortages amid heightened threats of retaliation against Gulf energy assets.

The incident has triggered immediate surges in global energy prices, with Brent crude rising over 5-6% to around $108-109 per barrel and European natural gas benchmarks jumping similarly, driven by fears of broader supply disruptions and potential tit-for-tat attacks on regional facilities. Although South Pars primarily supports Iran’s domestic consumption (accounting for 70-75% of its gas output) rather than large-scale exports, the outage tightens overall market sentiment and could indirectly pressure global LNG dynamics through heightened competition and risk premiums. Iran’s oil production, meanwhile, remains largely separate from this gas-focused strike; the country produces about 3.2-3.5 million barrels per day of crude (roughly 3-4.5% of global supply) and exports around 2 million barrels per day, mostly to destinations like China. While the gas field attack does not directly reduce Iran’s oil output or exports, the escalating conflict raises risks of further disruptions to Persian Gulf shipping lanes, potentially amplifying upward pressure on both oil and gas prices in the coming weeks.