Missiles exchanged between Iran and Israel-US joint forces in the Gulf are causing significant disruptions to oil flows, potentially unmatched by production increases outside the region, analysts revealed. Traders are concerned that if the violence persists, prices could surge sharply when markets reopen. While there have been no confirmed disruptions to shipping through the vital Strait of Hormuz, the threat of tankers being stranded or attacked has led major oil traders to halt shipments through the strait.
The narrow Strait of Hormuz, situated between Iran and Oman, manages almost 20 million barrels per day of crude and refined products. Tanker freight rates have surged, with benchmark rates for very large crude carriers traveling from the Middle East to China tripling in the year to date, indicating a reluctance among vessels to take risks. The Middle East accounts for roughly 20 percent of global oil supply, and the extent of the disruption will hinge on whether energy infrastructure becomes a direct target and how quickly normal shipping services resume, analysts emphasized.
Despite the ongoing conflict between Iran and Israel-US forces, there have been no confirmed strikes on major oil and gas infrastructure. However, explosions have been reported in the United Arab Emirates, Bahrain, Qatar, and Kuwait, with blasts heard near Iran’s Kharg Island, the primary terminal for Tehran’s crude exports. Analysts pointed out that even brief conflicts can have significant impacts on prices and supply, citing historical incidents in the Gulf during the Iran-Iraq war in the 1980s.
The Islamic Revolutionary Guard Corps (IRGC) has declared a fresh wave of attacks aimed at US and Israeli military installations across the Middle East in retaliation for recent US-Israeli strikes on Iran, which allegedly resulted in the death of Supreme Leader Ayatollah Ali Khamenei. Iran’s government issued an official statement vowing that this “great crime” will not go unanswered and will mark a new chapter in the Islamic world’s history.
