Military hostilities that erupted between the United States, Israel, and Iran on February 28 have resulted in the death of Iran’s Supreme Leader and significant damage to the region’s energy infrastructure, sparking fears of a major global economic disruption.
According to a report today, the conflict began with US and Israeli military airstrikes against Iran following a stalemate in nuclear programme negotiations. In response, Iran launched missile and drone attacks targeting Israeli and US military facilities across the region on the same day.
On the first day of the strikes, Iran’s Supreme Leader, Ayatollah Seyyed Ali Khamenei, and several high-ranking military officials were killed. On March 8, the Assembly of Experts elected Seyyed Mojtaba Khamenei as the nation”s third Supreme Leader. The confrontation broadened between March 1 and March 5, with US forces reportedly sustaining 8 fatalities and over 140 injuries.
Despite the escalating tensions, a prominent Iranian international energy analyst, Fereydoun Barkeshli, stated that crude oil prices in global markets have not yet reached alarming levels. He attributes this relative stability to substantial global reserves and the availability of nearly 3 million barrels of oil beyond current production levels.
Writing for local media, Barkeshli pointed out that while many analysts had forecast crude oil prices soaring to $200 per barrel, these significant reserves have so far averted such a dramatic spike.
The analyst observed that while Iran has not officially closed the crucial Strait of Hormuz, a key maritime route for oil, a ‘serious reduction in tanker traffic through the strait is being observed.’ He speculated, ‘Perhaps Iran is preparing the groundwork to charge fees for tanker transit in the future.’
About 20 million barrels of oil transit through the Strait of Hormuz daily under normal conditions, mainly heading toward Asian markets. The route is also vital for liquefied petroleum gas (LPG), supplying roughly one-fifth of global consumption.
However, the conflict has taken a severe toll on regional infrastructure. Barkeshli highlighted that since the war began, LPG prices have risen to more than double the level of oil. He stated that LNG production facilities and oil refineries have sustained ‘serious damage,’ with repairs potentially taking months or even more than a year and disrupting products used in the electricity industry.
Barkeshli concluded with a stark warning, suggesting the current calm in energy markets may only ‘signal a much larger upheaval ahead.’ He cautioned that this turbulence could emerge in the Persian Gulf and spread across the global energy system.