Kuwait Power Plant Attacked, Iraq Gas Field Shut Down: US-Iran Conflict Crosses 'Civilian Red Line', Crude Oil Jumps Nearly 16% in a Week

Energy infrastructure and civilian facilities have successively become targets, marking a new and dangerous phase in the US-Iran conflict.

Kuwait stated on Friday that Iran has expanded its attack range to include Kuwaiti power and desalination plants. Iraqi officials said on Thursday that the largest gas field in the northern Kurdish region had been shut down due to the threat of attack, while the US military extended its airstrike targets to the port of Chabahar, more than 350 miles from the Strait of Hormuz. Both sides have shown no sign of backing down.

Traffic through the Strait of Hormuz has dropped to a three-week low, and international crude oil futures have recorded double-digit gains this week. By Friday’s close, front-month Brent and WTI contracts were up about 15.9% and 15.5% for the week, each closing at a one-month high for the fourth time this week.

The performance of oil prices shows that the market is rapidly pricing in concerns over the conflict’s further spillover—this escalation is no longer limited to bilateral military confrontation but is beginning to affect the livelihoods and energy lifelines of neighboring countries. Saeid Golkar, an Iran security expert at the University of Tennessee at Chattanooga, warned that the situation is quickly spiraling out of control: “Even if both sides do not want an all-out war, we still face the risk of returning to full-scale conflict.”

Media outlets believe the most notable change in this round of US-Iran escalation is that the conflict has crossed the previously observed “civilian red line.”

The Kuwaiti government stated on Friday that an Iranian drone attack damaged one of its power and desalination plants. Occurring during the peak summer heat, the attack forced Kuwait to activate emergency contingency procedures, carrying a highly provocative message. The Kuwaiti military reported intercepting 32 drone attacks since early Thursday morning.

Meanwhile, according to Iraqi officials, drones attacked an oil tanker and a container ship at a southern Iraqi port on Thursday, as well as the northern Kurdish region. The region’s largest gas field was subsequently shut down citing “credible threats of attack.” The Kurdish regional authorities said more drones were intercepted over the regional capital Erbil on Friday. No party has yet claimed responsibility for the attacks within Iraq, but Iran and its local allies have frequently conducted drone strikes in the area previously.

Iran has also started targeting Qatar and Oman, two countries engaged in diplomatic mediation, and continues to increase its attacks on passing vessels.

The US military has likewise breached previous operational boundaries, extending strike targets from the strait’s periphery to deep within Iranian territory.

US Secretary of Defense Hegseth publicly released a photo of a maritime communications tower collapsed at Chabahar Port. This port, more than 350 miles east of the Strait of Hormuz near the Pakistan border, is Iran’s only deepwater ocean port. Iranian authorities confirmed the facility was attacked, insisting it serves only civilian purposes, including search and rescue operations for fishing boats. Chris Long, a former British naval officer who served in the Persian Gulf, noted the communication tower could also serve surveillance and intelligence-gathering functions.

At Bandar Abbas, at the other end of the Strait of Hormuz, the US military has conducted multiple night strikes on bridges in an attempt to sever supply routes to the strategic port and naval base. Iran’s national broadcaster IRIB reported multiple bridges in Bandar Abbas and surrounding areas had been hit, and highways connecting the port city to neighboring provinces were closed.

According to The Wall Street Journal, citing US officials, Iran has used port facilities to launch attacks against ships. Under normal circumstances, Bandar Abbas handles 90% of Iran’s container transport.

It is reported US forces have conducted airstrikes for six consecutive days, marking the largest escalation since the preliminary agreement was signed in June this year. In addition to bridges, targets include weapons and surveillance systems used by Iran to attack commercial vessels, such as small fast boats, coastal radar stations, air defense systems, and facilities storing missiles and drones.

The deepening military conflict has directly impacted the global energy market.

According to ship tracking agency Kpler, traffic through the Strait of Hormuz has dropped to a three-week low. Half of the transiting vessels are Iranian, and most traffic uses the route along the Iranian coast. The UK Maritime Trade Operations (UKMTO), affiliated with the Royal Navy, reported another ship was hit by an unidentified projectile near the Strait of Hormuz on Friday.

International oil prices have risen more than 10% this week. Trump previously stated that the impact of rising oil prices on the global economy deeply concerns him.

This round of conflict traces back to a memorandum of understanding signed between Trump and Iran a month ago—the agreement was initially intended to guarantee passage through the Strait of Hormuz, but was nullified last week after Iran launched a new round of attacks on US operations seeking to escort ships along the Omani coast. Iran insists the agreement grants it the right to manage strait transit and requires vessels to use the northern route along the Iranian coast.

Despite the ongoing deterioration, both sides have realistic concerns about avoiding full-scale war.

Iran faces major postwar reconstruction pressure, and domestic dissatisfaction with the government is growing. The Trump administration faces political pressure from the impact of surging oil prices on the US economy.

US officials stated earlier this week that Trump prefers to expand military action to break the diplomatic stalemate. According to flight tracking data and sources, the US military is redeploying jet fighters from Europe to the Middle East. In addition, over 2,000 US Marines from the 11th Marine Expeditionary Unit have been deployed, with military-released photos showing them conducting ship-boarding inspections in the Gulf of Oman to reinforce the port blockade.

On Thursday evening in prime time, Trump said in a televised address, "We’ve achieved significant victories in Iran as well, and you’ll soon see the results of these efforts."

However, Saeid Golkar’s assessment is more cautious. He points out that Tehran’s consistent strategy is to escalate at higher intensity to suppress adversaries, and drag out conflicts to wear down the US. With both sides seeking leverage and unwilling to give ground first, the risk of an uncontrollable escalation spiral has become the core risk the market cannot ignore.