UAE gas field struck, key oil hub halts as attacks intensify

A large gas field in the United Arab Emirates was set ablaze after a drone strike, and a vital oil port was halted again, piling pressure on energy markets and supply with each day that the Iran war goes on.

The latest incidents in the UAE add to a fast-growing list of attacks on energy assets in the Middle East. Some of the largest refineries and a massive LNG export plant have halted following drone strikes, ports around the region have been hit and oil fields in Saudi Arabia targeted.

The conflict that’s well into its third week has resulted in a near shutdown of the vital Strait of Hormuz, causing large disruptions to energy flows and reverberating through markets worldwide. Crude oil prices have surged to above $100 a barrel, consumers from the Americas to India and Japan are feeling the pinch and the risk to the global economy from rising inflation is mounting.

In the UAE, the hit on the big Shah gas project is the first on a producing field in the country. Abu Dhabi authorities brought the blaze under control at the high-sulfur gas field in the Empty Quarter desert west of the Emirate, according to the media office. Operations were halted and no injuries reported.

The attack on Shah comes a year after US Energy Secretary Chris Wright visited the field as part of his trip to the region. It’s operated by a joint venture of Abu Dhabi National Oil Co and US firm Occidental Petroleum Corp, and lies in the UAE’s portion of the vast Empty Quarter desert, where Saudi Arabia’s Shaybah field is also located, and which has been repeatedly targeted. Shah has the capacity to produce about a fifth of the UAE’s total gas and large amounts of sulfur, according to Adnoc’s website and Energy Institute data.

In Iraq, across the Persian Gulf, the Majnoon oil field was also targeted, according to an Iraqi oil ministry statement that didn’t provide additional details. The country is in talks with Iran to ​allow some of its oil ​tankers to pass through the ⁠Strait of Hormuz after Baghdad was forced to reduce output to about a quarter of its usual levels as storage tanks rapidly filled up.

Fujairah halt

The UAE’s key port of Fujairah suspended loadings again on Tuesday after some operations resumed briefly the previous day, according to a shipping agent and a person familiar with the matter. The port has been repeatedly targeted in the war, with the latest attacks coming after a warning from Iran’s military on Saturday that Fujairah and other UAE ports of Jebel Ali and Port Khalifa had become legitimate targets due to the presence of US military forces in civilian facilities, the semi-official Fars news agency had reported.

Loading berths at the Fujairah Oil Tanker Terminals, which handle liquid cargo including fuels, were halted as of Tuesday morning, according to a note from Inchcape Shipping Services. A terminal operated in a joint venture with Dutch firm Koninklijke Vopak NV has also suspended operations at its offshore mooring point, according to the note.

That’s a change from a report Monday evening that said the Oil Tanker Terminals were partially operational. A person close to the development had also said that crude oil loadings from Adnoc at the port remained suspended.

A Kuwait-flagged LPG ship suffered minor damage after it was hit by drone debris off Fujairah, a person with knowledge of the matter said Tuesday.

Fujairah is a major hub for both crude and fuels, and has taken on increased significance for both the UAE and global markets because of its position outside the Strait of Hormuz, which has been all but closed because of the war. The port sits at the end of a pipeline that connects it to the main oil fields in Abu Dhabi, and is the primary export terminal for the UAE’s Murban crude.

It has a vast storage capacity that traders use for quick access. The port also serves as a ship refueling hub.

The UAE also halted production at its Ruwais oil refinery last week as a precautionary measure after a drone strike caused a fire in the industrial area in which it’s located.

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