Brent Crude Oil Briefly Topped $119 as Iran Ramps Up Attacks on Gas and Oil Facilities in the Persian Gulf. Here Are 2 Things for Investors to Know.

Brent oil, the global crude oil benchmark, briefly topped $119 a barrel on Thursday morning after Iran attacked oil and gas infrastructure in the Persian Gulf. They came in retaliation after Israel struck an important Iranian natural gas field. Brent oil is now up more than 80% on the year, with its price recently above $110 a barrel. Meanwhile, the U.S. oil benchmark, WTI, is up more than 70% this year and recently traded near $100 a barrel.

Here are two things investors need to know about what's going on in the oil market.

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A significant escalation

Israeli forces attacked Iran's South Pars field on Wednesday. It marked the first direct military strike on Iranian energy infrastructure. South Pars is part of the world's largest natural gas reservoir, which it shares with Qatar (North Dome). It holds enough gas to supply the world's needs for 13 years. Iran currently uses gas from South Pars for domestic needs (electricity production and home heating). Qatar, on the other hand, has invested billions of dollars in developing liquefied natural gas (LNG) export terminals to ship gas produced from North Dome to global markets.

Iran responded to this attack by striking energy facilities in the Middle East. Missile attacks caused extensive damage to state-owned QatarEnergy's Ras Laffan Industrial City, a major global LNG hub. According to a Reuters report, the attacks knocked out 17% of the country's LNG capacity. QatarEnergy estimates that it could take three-to-five years to repair the facilities.

The attacks will have a direct impact on energy giants ExxonMobil (NYSE: XOM) and Shell (NYSE: SHEL). Exxon is QatarEnergy's partner in the damaged LNG facilities, owning a 34% stake in train S4 and a 30% interest in train S6. Meanwhile, Shell owns the Pearl gas-to-liquids plant in Qatar, which experienced extensive damage in the attacks. With these facilities going offline for repairs, it could impact their cash flows. They also have other infrastructure in the region at risk of future retaliatory strikes.

Waiting for a solution to reopen the Strait of Hormuz

Directly attacking oil infrastructure is only one of Iran's tactics to retaliate against military strikes in its country. It has also struck oil tankers trying to pass through the Strait of Hormuz on their way out of the Persian Gulf. This disruption has had a significant impact on global oil supplies, as 20% of the world's crude flowed through this narrow passageway before the war began.

The U.S. is working on solutions to reopen the Strait to tanker traffic. The U.S. has considered using the Navy to escort ships to prevent more attacks. It's also seeking help from allies help secure the Strait.

If Iran continues to attack oil tankers, crude prices will keep rising. However, if there's a solution that allows tankers to move freely out of the Persian Gulf, oil prices, especially Brent, should come down.

Energy prices could remain very volatile

Iran is using energy as a weapon to retaliate against military strikes within the country, causing prices to spike. If these attacks continue, energy prices could keep surging. As a result, energy prices and oil stocks could be very volatile until the conflict subsides.

Matt DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.