The United Arab Emirates has seen its oil production collapse by 50% as Iranian strikes target the nation’s most vital energy assets. On Tuesday, Brent crude prices surged to $103.20, a significant jump from pre-war levels. The escalation follows a series of drone and missile attacks that have successfully hit the Shah gasfield and the Port of Fujairah.
This new phase of the conflict marks the first time that Iran has successfully targeted “upstream” production facilities rather than “downstream” infrastructure. The Shah field, one of the largest in the world, was hit on Monday, causing a fire that led to a total suspension of activity. Authorities are currently working to contain the damage and evaluate the safety of the site.
The Port of Fujairah, a critical export hub, has also halted loading operations following a projectile attack on a nearby tanker. This disruption is catastrophic for the UAE, which relies on these terminals to move oil past the Iranian-controlled Strait of Hormuz. With these routes blocked, the region’s energy exports are effectively at a standstill.
The “oil market shock” is having a profound impact on refined fuels, according to analysts at Goldman Sachs. Jet fuel and diesel prices are rising even faster than crude, threatening the global logistics and aviation industries. In Asia, where most of this oil is usually destined, governments are resorting to coal and mandatory energy-saving measures.
Political tensions remain high as Iranian Foreign Minister Abbas Araghchi dismissed rumors of secret negotiations with US representatives. Meanwhile, the market remains focused on the escalating military actions on the ground. Countries like Thailand and Bangladesh are already feeling the pinch, implementing drastic changes to daily life to cope with the energy shortage.