Middle East escalation hits energy infrastructure, rattles global markets as gold and oil prices surge
The escalating conflict between Israel and Iran has the Middle East and global markets on edge, with the price of a number of key commodities soaring over the weekend.
The tensions saw investors move to safe-haven commodities such as gold, which has climbed more than 2.4% since Friday to currently sit at US$3,433/oz (A$5,300).
Market commentators are suggesting oil could hit US$150 (A$232) a barrel if fighting continues to intensify, while gold is closing rapidly on US$3,500 (A$5,400) per ounce.
Petroleum targets hit
Iran’s oil, gas and nuclear assets have been prime targets for Israel’s missiles and further attacks on its energy operations may have a major impact on global supplies.
Iran was forced to partially suspend production at the world’s biggest gas field on Saturday after an Israeli missile strike caused a fire there.
Located offshore Iran’s southern Bushehr province, South Pars is responsible for the majority of Iran’s gas production.
Iran is the third-largest producer in the OPEC group and extracts about 3.3 million barrels per day of crude oil, and another 1.3Mbpd of condensate and other liquids.
Israeli refinery damaged
A retaliatory attack by Iran hit the Bazan oil refinery in Israel, with missiles also damaging associated pipelines.
Iran has also threatened to attack vessels in the Strait of Hormuz, a major waterway for the transport of liquefied natural gas.
ANZ market analyst Daniel Hynes believes markets are yet to fully price in the risk the oil industry faces.
Nuclear facilities under fire
Meanwhile, Israel has stepped up its plans to shut down Iran’s controversial nuclear program.
Israel hit three key Iranian nuclear facilities – Natanz, Isfahan and Fordow – and has killed a number of top scientists involved in the country’s nuclear research and development.
There are unconfirmed reports of satellite imagery showing that missile strikes had a significant impact in at least two of the locations.