Iran-Israel Conflict: Attacks, Retaliation & LPG Market Impact

Escalating tensions in the Middle East reached a new point on Saturday, March 21, 2026, as Iran launched a series of attacks and warned of further retaliation against the United States and Israel. The developments come amid growing international concern over regional stability.

Iran’s Islamic Revolutionary Guard Corps (IRGC) announced the seventh wave of its “True Promise-4” operation, stating it had targeted both Israel and the U.S. Navy’s Fifth Fleet. According to the IRGC, the attacks were carried out using “Khaibar” and “Emad” missiles, striking locations in northern and central Israel, as well as targets associated with the U.S. Navy. The IRGC declared the operation a success and asserted that its upgraded air defense systems would achieve further results, warning against underestimating Iran’s defensive capabilities.

In a separate statement, the IRGC claimed its new air defense system downed an F-16 fighter jet in central Iran at 3:45 a.m. Local time on March 21. This would mark the third enemy aircraft reportedly shot down by Iranian forces since the start of the conflict, according to Iranian sources.

Meanwhile, a missile strike on the southern Israeli city of Dimona late on March 21 caused a building to collapse and injured 39 people. Iranian media subsequently confirmed responsibility for the attack. Dimona is located in the Negev Desert and is near a sensitive Israeli nuclear facility.

The International Atomic Energy Agency (IAEA) stated on March 21 that it had taken note of reports regarding the missile strike on Dimona. The agency reported no indications of damage to the Negev Nuclear Research Center and detected no abnormal radiation levels in the area. IAEA Director General Grossi emphasized the require for “maximum military restraint,” particularly around nuclear facilities, to avoid any risk to nuclear safety.

Israeli Military Claims Strike on Tehran Nuclear Research Facility

The Israel Defense Forces (IDF) announced on March 21 that its air force had recently struck a “strategic research facility in Tehran used for the development of nuclear weapons components.” The IDF stated the facility was located within a Tehran university of technology and had been used by Iran to “develop nuclear weapons components.”

Earlier in the day, Iranian President Raisi dismissed U.S. Claims that Iran is seeking to develop nuclear weapons as a pretext for military action during a phone call with Indian Prime Minister Modi. Raisi reiterated Iran’s willingness to accept verification and oversight of its peaceful nuclear activities.

Reports also surfaced on March 21 of a renewed attack on Iran’s Natanz nuclear facility. Israeli officials later indicated they were unaware of any IDF involvement in the attack, even as sources later suggested U.S. Forces were responsible for the strike on the Natanz uranium enrichment facility.

U.S. Military Reinforcements Headed for Strait of Hormuz

U.S. Officials announced that the military is deploying three additional warships and approximately 2,500 Marines to the Middle East. The move is intended to provide President Trump with more military options, including a potential operation to “open” the Strait of Hormuz, requiring air and sea forces off the Iranian coastline.

The Trump administration is also considering deploying ground troops to Khark Island, a key hub for Iranian oil exports, in an attempt to seize the island and leverage it as leverage to compel Iran to reopen the Strait of Hormuz.

Khark Island, located in the northwestern Persian Gulf, is approximately 13 miles from the Iranian coast and handles around 90% of Iran’s oil exports.

Iran Issues Warning of “Unprecedented” Retaliation

In response to the U.S. Plan to seize Khark Island, Iranian military sources warned that any “military aggression” against the island would be met with an “unprecedented” counterattack.

The sources also suggested that creating insecurity in the Mandeb Strait and the Red Sea was among the options available to the “resistance front.” They warned that the situation facing the U.S. Would be far more complex than it is currently.

A spokesperson for Iran’s Khatam al-Anbiya Central Headquarters also stated on March 21 that Iran is “taking significant action” in the Strait of Hormuz. The spokesperson emphasized that “if Iran’s infrastructure is attacked, Iran will attack more critical and critical infrastructure of the U.S. And Israel.”

Geopolitical Conflict Fuels LPG Market Surge

The price of LPG has risen sharply in recent days, with the most active April 2026 contract reaching a record high on Friday, March 21. The surge is largely attributed to the ongoing conflict in the Middle East.

According to energy analyst Xiao Haiming of Zhongtai Futures, the situation is impacting the flow of LPG through the Strait of Hormuz, a critical transit route for Middle Eastern oil and gas. Shipping risks and costs have also increased significantly. The price surge was further fueled by an attack on Iran’s South Pars gas field on March 18, which temporarily halted operations at some facilities. Missile strikes on several LPG facilities in Qatar’s Ras Laffan City have disrupted approximately 17% of Qatar’s LPG exports.

Chen Xinchao, chief analyst at Guotai Junan Futures, noted that the Middle East is the core supply source for global LPG, with roughly one-third of global LPG shipments passing through the Strait of Hormuz. Market expectations of prolonged supply disruptions are driving up LPG forward prices. The situation is further exacerbated by export delays from U.S.-based Targa Corporation due to compressor failures, contributing to a broader LPG supply shortage.

Xiao Haiming indicated that the LPG market is currently experiencing a double decline in both supply and demand. On the supply side, the potential closure of the Strait of Hormuz is reducing global supply, while several domestic refineries are proactively reducing output in anticipation of raw material shortages. On the demand side, terminal demand has not improved significantly, and the combination of high costs and high operating rates is unsustainable, leading to expectations of reduced operating rates at downstream chemical plants.

Chen Xinchao stated that the reduction in Middle Eastern supply creates an unfillable gap in Asian LPG supply, while demand for civil combustion in countries like India provides strong support for international LPG prices. Looking at the domestic spot market, local refineries currently have adequate raw material inventories, but LPG, as a byproduct, faces inventory pressure due to high prices and limited downstream acceptance. This contradiction has led to a continued weakening of the Shandong civil gas basis and a significant discount in spot prices to futures.

Du Bingqin, director of energy and chemical research at Guangda Futures, noted that geopolitical conflict has driven up raw material costs and that domestic PDH device operating rates have fallen significantly. While U.S. Supply has become an important marginal increment to the market, continued closure of the Strait of Hormuz will lead to a further decline in Middle Eastern LPG supply, and domestic enterprises will face increasing risks of raw material shortages.

“In the future, the Middle East conflict will remain the main trading line in the LPG market,” Xiao Haiming said, predicting that global LPG supply will not return to previous levels of ease and that LPG prices will remain high and volatile.

Chen Xinchao also believes that short-term geopolitical risk premiums are unlikely to dissipate quickly, and LPG prices are likely to remain in a strong volatile range. However, Chen Xinchao cautioned that if spot prices do not rise, LPG prices may face a callback pressure. As the weather warms, civil combustion demand will enter the off-season, which will also put pressure on LPG price increases.