Iran Could Create Global Energy Crisis With Retaliatory Strikes

The Iran war could create an energy crisis as the besieged regime lashes out at neighboring countries, hoping to destroy and compromise oil and natural gas infrastructure and supply chains.

Iran has been launching retaliatory strikes throughout the Middle East since the start of a joint U.S.-Israel military operation began February 28. This week, Saudi Arabia halted production at the Ras Tanura refinery, its largest, as the nation has faced drone and missiles strikes from Iran.

Also, this week, Iran announced that it would begin attacking any ship that attempted to navigate the Strait of Hormuz, Bloomberg News reported. The outlet report that a fifth of the world’s oil production is transported through the strait.

Qatar stopped liquefied natural gas production at the world’s largest export facility because of drone attacks, driving European gas prices higher by more than 50 percent.

Bloomberg noted that energy prices had risen, but not as dramatically as might have been expected. For example, although Brent crude oil prices rose Monday, they only equaled their 2024 high. Still, the outlet noted that a prolonged conflict could create an energy crisis and soaring prices.

“The threat to security of supply is here and now,” Simone Tagliapietra, an analyst at Bruegel told Bloomberg. “The extent of it will depend on the duration of the shutdown, but we are now into a new scenario.”

The NBC News reported that gas prices rise about 2.5 cents for every $1 increase in crude oil price. Meaning that the $5 increase already seen early Monday will translate to a per gallon price rise of about 13 cents. How high prices might go depend on how successful Iran is at targeting gas and oil infrastructure throughout the region.

The Times of Israel reported that other drone strikes by Iran had paralyzed shipping in United Arab Emirates and Oman. The outlet reported that strikes had been reported throughout the region including in Abu Dhabi, Dubai, Doha, Manama, and Oman’s commercial part of Duqm.

“The Iranian regime is under existential threat and therefore they’re prepared to do anything to get the world’s attention to stop it,” Gary Ross, a veteran oil consultant turned hedge fund manager at Black Gold Investors LLC told Bloomberg. “We’ve had a somewhat muted response but the longer it carries on, the more risk there is of higher prices.”