Israel just hit Iran's wallet: Has World War 3 entered the energy stage with attack on Iran's South Pars gas field?

Time of India

a day ago

Iran
was forced to shut part of its operations at the
South Pars
gas field after a suspected Israeli drone strike ignited a fire at one of its critical processing units on Saturday. The incident caused the suspension of 12 million cubic metres of gas production. The blaze, which broke out at Phase 14 of the site, was eventually brought under control, according to Iran's oil ministry.
This marks Israel's first known strike on Iran's oil and gas infrastructure. Until now, military operations under
Operation Rising Lion
had focused on Iran's nuclear and defence assets. Saturday's hit signals a shift—economic targets are now in play.
'This is probably the most important attack on oil and gas infrastructure since Abqaiq,' said Jorge Leon of
Rystad Energy
, referencing the 2019 drone attack on Saudi facilities that rattled global oil markets.
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Why South Pars matters
The South Pars field lies offshore in Iran's southern Bushehr province. It stretches across the Persian Gulf, where Iran shares it with Qatar. The Qatari portion is known as the North Field and supplies a vast share of the world's liquefied natural gas (
LNG
).
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This gas field is vital. It holds nearly half of Iran's gas reserves and accounts for around 66% of its total gas output. Iran, the third-largest gas producer globally after the United States and Russia, produces about 275 billion cubic metres (bcm) of gas annually—6.5% of global supply.
Due to heavy international sanctions, most of this output stays within Iran. The country relies on it to keep homes warm, factories running, and its economy breathing.
In contrast, Qatar exports 77 million tonnes of LNG annually from the same field, with support from global firms like
Shell
and ExxonMobil.
The strike puts more than just Iranian energy at risk. It sends a warning that other vital installations may be next.
Kharg Island, responsible for about 90% of Iran's oil exports, and the Strait of Hormuz, through which 21% of global LNG and around 14 million barrels of crude oil flow daily, are now considered potential targets.
— AstorAaron (@AstorAaron)
WWIII: Analysts warn of wider consequences
Energy experts say this is not just about gas—it's about sending a message. The battlefield has expanded.
'This is probably the most important attack on oil and gas infrastructure since Abqaiq,' said Jorge Leon of Rystad Energy, referring to the 2019 attack that crippled Saudi oil processing for weeks.
Others say the strike signals that energy assets are now legitimate wartime targets.
'This is a warning shot that Israel is willing to hit Iranian energy infrastructure if Israeli civilians are targeted,' Richard Bronze, head of geopolitics at Energy Aspects, told The New York Times.
The ripple effect could be felt far beyond Iran's borders. South Pars is jointly operated with Qatar, a top global LNG exporter. Disruption in this shared field threatens energy stability in Asia and Europe.
Also Read:
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Ripple effects for global markets
Oil prices surged by as much as 14% on Friday after the first Israeli strikes on Iranian territory, closing 7% higher at $73 (around ₹6,200) per barrel. Analysts expect prices to jump again as markets open on Monday.
While South Pars gas is mainly for Iran's domestic use, the symbolism of the strike—and the risk of it spreading—is what's rattling markets.
'This raises the possibility that any further escalation could follow an 'energy-for-energy' logic,' said Ben Hoff, head of commodity research at
Societe Generale
. 'An attack on one side's oil infrastructure might invite a retaliatory strike on the other's.'
Iranian President Masoud Pezeshkian has vowed a strong retaliation, raising concerns that regional hostilities will deepen. As missiles from both sides continue to criss-cross the sky, markets remain volatile and nervous.
Also Read:
'This is how World War III begins': As missiles rain on Tel Aviv, analysts say the next strike could drag the world in
What's at stake for Iran?
Iran's energy system was already strained. The country is in the midst of one of its worst power crises in decades, with rolling blackouts and gas shortages crippling daily life and industry.
The Iran Chamber of Commerce has pegged the daily economic loss from outages at nearly $250 million.
'Attacking Iran's energy infrastructure will be a disaster because repairing them will be costly and take time,' said Abdollah Babakhani, an Iranian energy expert based in Germany.
Sanctions, ageing equipment, and lack of investment have left the sector fragile. A prolonged disruption could further batter the economy and stoke public unrest.
Could the Gulf become a wider war zone?
Tehran believes this strike goes beyond battlefield strategy—it is an economic war.
'Iran's Foreign Minister Abbas Araqchi called the Israeli attack on South Pars 'blatant aggression and a very dangerous act',' according to state media.
He warned the strike could 'drag the conflict into the Persian Gulf region' and potentially involve the entire region—and beyond.
'Israel's attack would never have happened without the U.S. green light and support,' Araqchi added. He accused Washington of attempting to derail ongoing nuclear talks. 'It is necessary for the United States to condemn Israeli strikes on Iranian nuclear facilities if they want to prove their goodwill.'
A blow to Iran's already strained energy sector
The attack couldn't have come at a worse time for Iran. The country is in the grip of one of its worst energy crises in decades.
Blackouts have become routine. According to the Iran Chamber of Commerce, these outages cost the economy around $250 million per day. Homes and factories face power cuts. Energy rationing is already affecting industry, transport, and public services.
Sanctions and outdated infrastructure have made upgrades nearly impossible. Repairs to damaged infrastructure, especially in offshore fields like South Pars, are costly and slow.
'Attacking Iran's energy infrastructure will be a disaster because repairing them will be costly and take time,' said Abdollah Babakhani, an Iranian energy expert based in Germany.
Red lines and retaliation
Until now, Israel had largely targeted Iranian military and nuclear assets. But this strike changes the game.
By hitting the country's energy backbone, Israel is signalling it is willing to go further. Iran's President Masoud Pezeshkian has vowed stronger retaliation.
Experts warn that Israel's own energy infrastructure could be next. And any new strikes near chokepoints like Kharg Island or the Strait of Hormuz could ignite a full-blown crisis. These areas are vital arteries for global oil—14 million barrels a day pass through the strait alone.
If they're blocked, the world will feel it at the pump.
China, sanctions and strategic blowback
The geopolitical risk goes beyond Iran and Israel. China, Iran's biggest oil buyer, could see its supplies hit if more infrastructure is damaged.
Despite U.S. sanctions, Chinese private refiners continue to import Iranian oil. Some have been blacklisted by the U.S. Treasury. Any large-scale disruption could impact China's energy security—and strain already tense relations with Washington.
Meanwhile, some analysts believe OPEC nations like Saudi Arabia may try to balance the market by ramping up output. But that would take time. And prices are already swinging.
The Israeli strike on South Pars isn't just a military flashpoint—it's a strike at Iran's economic heart. It pushes a high-stakes regional conflict into energy warfare.
Markets are jittery. Gulf nations are watching nervously. And with both sides vowing escalation, there's no clear off-ramp.
What started as a targeted conflict now risks boiling over into a broader energy and economic crisis—with consequences far beyond the Middle East.