Iran Strikes Kuwait's Mina Al-Ahmadi Oil Refinery

Two waves of Iranian drones struck Kuwait's Mina Al-Ahmadi refinery early Friday morning, March 20, 2026, setting fires across multiple processing units for the second consecutive day [1]. The attack, timed to coincide with Eid al-Fitr celebrations marking the end of Ramadan, is part of a sweeping Iranian campaign against Gulf Arab energy infrastructure that has sent global oil prices surging past $110 per barrel and raised the prospect of the most severe energy supply disruption since the 1970s [2][3].

The Scale of Damage

Kuwait Petroleum Corporation (KPC) confirmed that multiple drone strikes hit operational units at Mina Al-Ahmadi early Friday, igniting fires that forced the shutdown of several processing units [4]. No casualties were reported in either the Thursday or Friday attacks, according to preliminary assessments by KPC [5].

The refinery's capacity figures vary across sources. KPC's official filings list Mina Al-Ahmadi's processing capacity at 346,000 barrels per day (bpd), while the facility's broader complex—including gas processing and condensate operations—handles significantly more [6]. Several wire reports have cited a 730,000 bpd figure, which appears to reflect the combined capacity of Kuwait National Petroleum Company's (KNPC) two refineries, Mina Al-Ahmadi and Mina Abdullah, which together process approximately 690,000 bpd [7]. KPC announced it had suspended operations at both refineries following the drone strikes [8].

No official repair timeline has been disclosed. Given the precedent of the 2019 Abqaiq-Khurais attack in Saudi Arabia—where repairs to a facility processing 5.7 million bpd took approximately two weeks for partial restoration—analysts expect weeks to months before full operations resume, depending on the extent of structural damage to processing units [9].

Kuwait's Place in Global Oil Supply

Kuwait produced approximately 2.4 million barrels of oil per day prior to the conflict, making it OPEC's sixth-largest producer [10]. The shutdown of both KNPC refineries does not immediately halt Kuwait's crude oil extraction, but it eliminates the country's domestic refining capacity, forcing a choice between exporting unrefined crude—if export routes remain available—or cutting production entirely.

That choice has been complicated by Iran's effective closure of the Strait of Hormuz, the narrow waterway through which roughly 20 million barrels of oil transit daily, representing about 20% of global seaborne oil trade [11]. Iran achieved this not through a traditional naval blockade but through repeated drone strikes near the strait, prompting insurers and shipping companies to declare the route unsafe [12]. Kuwait and Bahrain had already cut back oil production before the refinery strikes due to lack of storage capacity and blocked export routes [13].

Source: FRED / Federal Reserve Bank of St. Louis

Data as of Mar 20, 2026CSV

The Trigger: Israel's South Pars Strike

Iran's campaign against Gulf energy facilities followed an Israeli airstrike earlier in the week on Iran's South Pars gasfield—the country's largest energy asset, supplying approximately 80% of Iran's domestic natural gas needs [1]. The Israeli strike on South Pars was coordinated with the United States, according to three Israeli officials, though President Trump publicly denied prior knowledge [14].

The South Pars attack represented a significant escalation in the US-Israeli war on Iran, which began on February 28, 2026, with Operation Epic Fury—a joint US-Israeli campaign that launched nearly 900 strikes in its first 12 hours [15]. Iran's Supreme Leader Ali Khamenei was killed in the initial wave of strikes, along with dozens of senior Iranian officials [15].

Iran's Islamic Revolutionary Guard Corps (IRGC) framed the Gulf strikes as direct retaliation for the South Pars attack, warning that five additional facilities across Saudi Arabia, the UAE, and Qatar would be targeted [16]. Iranian Foreign Minister Abbas Araghchi stated the strikes represented only a "fraction" of Tehran's capabilities and threatened "zero restraint" if Iranian energy facilities were hit again [17].

Weapons and Capabilities

Iran's strikes on Gulf energy infrastructure have relied primarily on drone attacks rather than ballistic or cruise missiles [4]. The IRGC confirmed its involvement in the Mina Al-Ahmadi strike, while Kuwait's military said air defenses were "actively intercepting incoming missile and drone threats" [1]. Saudi Arabia reported intercepting and destroying over a dozen drones within a two-hour window, while the UAE reported incoming threats at al-Dhafra airbase and Bahrain reported a warehouse fire from shrapnel [1].

The reliance on drones reflects Iran's strategic adaptation. Low-cost unmanned aerial vehicles can overwhelm air defense systems through sheer numbers while keeping costs manageable—a lesson demonstrated in the 2019 attack on Saudi Aramco's Abqaiq facility, where drones and cruise missiles temporarily knocked out 5.7 million bpd of processing capacity [9]. The 2026 strikes, however, differ in both scope and audacity: rather than using proxy forces as in 2019, Iran is openly claiming responsibility and striking multiple countries simultaneously across the Gulf [18].

Oil Market Shock

The cumulative effect of Iran's Gulf campaign on energy markets has been severe. Brent crude, the international benchmark, surged from under $73 per barrel on the eve of the war in late February to $116.38 per barrel by mid-March, briefly touching $126—a level not seen in years [2][3]. On March 20, following the second Mina Al-Ahmadi strike, WTI crude traded at $97.33 (+1.78%) and Brent at $110.60 (+1.93%) [5].

The European TTF benchmark for natural gas prices rose 24% in a single session following Iran's attack on Qatar's Ras Laffan facility, the world's largest LNG terminal [2]. That strike wiped out roughly 17% of global LNG supply—damage the CEO of QatarEnergy estimated could take up to five years to repair, costing an estimated $20 billion in annual revenue [1].

Total Middle East oil output cuts have been estimated at 7 to 10 million barrels per day, representing 7% to 10% of global demand [2]. The International Energy Agency took the unprecedented step of announcing the release of 400 million barrels from strategic petroleum reserves, though this would cover only about 20 days of typical Strait of Hormuz traffic [19].

Source: PBS / Al Jazeera / KNPC / QatarEnergy (compiled estimates)

Data as of Mar 20, 2026CSV

Countries most exposed to the disruption include those heavily dependent on Gulf oil imports. In 2024, an estimated 84% of crude oil and condensate flowing through the Strait of Hormuz was destined for Asian markets, with China receiving roughly a third of its oil via the strait [11]. Japan, South Korea, and India are also acutely vulnerable [20].

Historical Precedent: From Abqaiq to Al-Ahmadi

The September 2019 attack on Saudi Aramco's Abqaiq and Khurais facilities remains the closest historical parallel. That strike temporarily removed 5.7 million bpd from global supply—roughly 5% of world output—and triggered a roughly 14% single-day spike in oil prices [9]. The Houthis claimed credit, though the United States, Saudi Arabia, France, Germany, and the United Kingdom attributed responsibility to Iran [21].

The 2019 attack, however, was a single strike against one country's infrastructure, and it was not publicly claimed by Iran. The 2026 campaign differs on every dimension: Iran is striking multiple Gulf states simultaneously, openly claiming responsibility through the IRGC, and sustaining the campaign over multiple days while maintaining disruption of the Strait of Hormuz [18]. The economic impact has already exceeded that of Abqaiq by an order of magnitude—Goldman Sachs estimated that Qatar and Kuwait could see GDP declines of 14% if the conflict extends through April, while Capital Economics projected regional GDP declines of 10-15% from lasting infrastructure damage [22].

The Gulf States' Dilemma

The GCC states face a difficult strategic calculation. Despite absorbing repeated strikes on their most valuable economic assets, Gulf leaders have so far maintained a defensive posture and have not retaliated militarily against Iran [23]. Saudi Crown Prince Mohammed bin Salman, with US backing, vowed to employ military force against further Iranian incursions, but no offensive operations have been launched [15].

Part of the restraint reflects geography. In late January, Gulf states reportedly blocked US military base and airspace access over fears of Iranian retaliation—a concern that proved prescient [24]. The Gulf nations find themselves caught between their security partnerships with Washington and the immediate physical threat from Tehran: any decision to join offensive operations against Iran risks inviting even more devastating attacks on energy infrastructure, desalination plants, and civilian centers [23].

As CNBC reported, the Gulf states' defensive stance "won't last forever," with growing pressure from both domestic populations and international partners to respond [23]. The question is whether that response takes a military form or channels through economic and diplomatic pressure on Washington to negotiate an end to the conflict.

Iran's Strategic Calculus

From Tehran's perspective, attacking Gulf energy infrastructure serves several interlocking objectives, according to Matthew Powell, a military strategy expert writing in The Conversation [22].

First, the strikes aim to demonstrate capability to both international and domestic audiences. With the regime's top leadership killed and its conventional military outmatched by US-Israeli firepower, Iran's ability to project force through asymmetric means—drones, mines, and missile strikes on soft targets—serves as proof of continued relevance and resistance [22].

Second, Iran seeks to create economic pain that pressures Gulf states into lobbying Washington to end the war. Gulf nations depend heavily on hydrocarbon exports: Qatar's energy sector generated 83% of government revenues in 2023, making infrastructure damage an existential economic threat [22].

Third, soaring global energy prices create political pressure on the Trump administration. US gasoline prices had risen to an average of $3.60 per gallon—the highest since Russia's 2022 invasion of Ukraine—creating potential headwinds ahead of November 2026 midterm elections [22].

The risks of this strategy are substantial. International condemnation has been broad, and the strikes have undermined years of Iranian diplomatic engagement with Gulf neighbors [25]. But Tehran's calculation appears to be that, having already lost its Supreme Leader and facing sustained aerial bombardment, the regime has little left to lose from escalation—and much to gain if the economic pressure forces a ceasefire [22].

US Military Posture and Response Options

The United States assembled its largest Middle East military force since the 2003 Iraq invasion in the weeks preceding the war. Assets deployed include Carrier Strike Groups 3 and 12, led by the USS Abraham Lincoln and USS Gerald R. Ford, along with F-22 Raptor and F-15E Strike Eagle fighters deployed to bases in Israel and Jordan [24][26]. US naval forces have already engaged Iran's navy, destroying more than 20 Iranian ships in early March [27].

The Pentagon has requested an additional $200 billion for the Iran war and broader defense needs [28]. However, the US military focus has been on striking Iranian military and nuclear targets directly rather than preventing Iranian drone attacks on Gulf infrastructure—a gap that the Mina Al-Ahmadi strikes have exposed.

Israel, for its part, has claimed to be working to reopen the Strait of Hormuz, with Prime Minister Netanyahu asserting that Israeli forces were helping to secure the waterway [3]. The credibility of that claim remains uncertain, given that insurance companies—not navies—ultimately determine whether commercial shipping resumes.

What Comes Next

The immediate question is whether Iran's Gulf campaign intensifies or whether the escalating economic costs create enough pressure to bring parties to the negotiating table. Iran has demonstrated both the will and capability to sustain strikes on Gulf infrastructure over multiple days. The Gulf states have so far absorbed the damage without retaliating, but that restraint is being tested with each successive attack.

The broader 2026 Iran war—now entering its fourth week—shows no signs of a ceasefire. US and Israeli strikes continue on Iranian military and governmental targets, while Iran expands its asymmetric campaign across the Gulf. The Mina Al-Ahmadi refinery, still smoldering as firefighters worked to contain the damage on Friday, stands as a physical testament to the widening costs of a conflict that has drawn in nearly every nation in the region.

For global energy consumers, the arithmetic is unforgiving. Strategic petroleum reserves can buffer prices temporarily, but they cannot replace the 20 million barrels per day that once flowed through the Strait of Hormuz. Until either the strait reopens or the war ends, the world's energy markets remain hostage to the next Iranian drone launch.