Whoa, Nellie! The Struggle for Control Over Iran's Energy Sector could Trigger a Mega-Crisis in the Middle East
Middle East conflict intensifies over control of oil and energy resources
By: Hannes Vo g el -- Get Social -- Facebook -- Twitter -- Whatsapp -- Email -- Print -- Copy Link
Smoke billows for miles over Tehran as Israel launches a strategic offensive against Iran's energy infrastructure. Since Sunday night, the Sharan fuel depot - a posh suburb known for luxury apartments - has been on fire, followed by one of Iran's largest refineries, located 15 kilometers south of Tehran. Tensions escalate further in the Bushehr province on the Persian Gulf as Israeli drones attack the South Pars gas field, causing another fire at a crucial refinery for the country's energy supply.
Politics -- The Mullahs On The Brink? Grim: "World Leaders May Convene in Moscow" Israel's aerial assault on Iran's energy facilities marks a new node in the confrontation. It's no longer just a matter of dismantling the nuclear program, rather, Israeli drones are now zeroing in on the energy infrastructure and air defense systems, rocket launchpads, and command centers of the Iranian Revolutionary Guards. Prime Minister Benjamin Netanyahu envisions more than regime change in Tehran: "It's entirely possible that this conflict leads to that result," he told "Fox News."
The apparent objective behind these targeted strikes by the Israeli Air Force is to hollow out Tehran's energy supply, stirring unrest that could topple the clerical regime. The energy sector has, thus, morphed into a battlefield in Netanyahu's war against Iran. As ever, the domino effect of conflicts in the Middle East could be profound.
Netanyahu Flashes a Tense Warning
The price of a barrel of Brent crude surged past $78 on Monday, with fears of a spreading conflict fueling the climb. Prior to Israel's attack on Friday, the price was hovering around $70. The specter of a full-blown Middle East conflict is sending shivers through the oil markets.
Politics -- Israel in Lockdown Blufarb: "Street Life Hits Pause" The gloomy scenario is not far-fetched: Iran is the third-largest oil producer in the Middle East, following Saudi Arabia and Iraq. If Tehran is removed as a supplier, global oil prices could soar sky-high. Israel's aerial onslaught on Iran's energy facilities delivers a stark message: "We're not ruling out any moves," said the Financial Times, quoting John Raine from the IISS think tank. But Raine added: "I doubt they intend to obliterate the entire network."
Fortunately, for now, the oil markets are holding steady, thanks to Israel's Air Force sparing Iran's critical export infrastructure, which has been battered by sanctions. But Iran's energy industry is a single bombing raid away from collapse.
More than 90% of Iran's exports funnel through Charg, an Iranian oil terminal on a Persian Gulf island, which was severely damaged by air attacks during the Iran-Iraq War. In the event of Netanyahu opting to ramp up the oil war, Charg would likely be the next target. Deliveries would then have to pass through yet another bottleneck - the Strait of Hormuz. Almost 20% of the oil exports from the entire Middle East travel through this waterway, which is a mere 50 kilometers wide.
The oil shipping lane with a chokehold
The US Energy Agency characterizes the Strait of Hormuz as "the most significant chokepoint for global oil transit." The West's oil lifeline lies within reach of Iranian missiles, drones, and aircraft. Tehran hasn't hesitated to threaten the strait, often bragging about cutting off imports from Saudi Arabia. It seems they've picked up the torch this time: a leader from the Iranian Revolutionary Guards hinted at closing the Strait of Hormuz over the weekend.
Economy -- Third Energy Hike in a Row: German Home Heating Oil Prices Increase after Iranian Flare-up Despite the looming threat, it appears the strait remains open for business for now. A direct attack on export infrastructure would shut off Iran's own supply and cause a loss of foreign exchange earnings. Key trading partner China, for one, is keen on maintaining stable oil prices and avoiding supply disruptions from the Middle East. However, should Tehran become increasingly desperate, they might decide that attacking the strait - sacrilege as it may seem - is the card they need to play.
History cautions us about reckless moves during times of high pressure. During the Iran-Iraq War, both sides lashed out at one another's oil exports in the Strait of Hormuz. In 1987, the USS Stark - an American frigate - was struck by two Iraqi anti-ship missiles. And when Trump tightened sanctions in 2019, Tehran responded with attacks on oil tankers in the Persian Gulf and ultimately a drone attack on the heart of Saudi Arabia's oil facilities, which were orchestrated by Houthi rebels in Yemen. This incident caused a plunge of 5% in global oil demand, sending prices skyrocketing.
Source: ntv.de
- Israel-Iran conflict
- Iran
- Commodity oil
- Commodity prices
Enrichment Data:
Implications and Factors to Consider:
- Economic Effects: Disruptions to Iranian oil production and exports could lead to a surge in global oil prices and cause economic instability in countries dependent on oil imports.
- International Relations: The conflict could escalate and draw in other regional actors and global powers, leading to geopolitical turmoil.
- Environmental Concerns: Targeting energy facilities in Iran might result in environmental disasters such as oil spills or gas leaks.
- Humanitarian Concerns: The conflict could exacerbate humanitarian crises in the region, causing civilian casualties, displacement, and impairing basic services like electricity and water supply.
- Regional Stability: The instability in the Middle East could trigger additional conflicts in the region, further destabilizing the region.
- Potential Military Escalation: The involvement of major powers like the U.S. could lead to a broader military conflict, potentially involving other nations.
- The escalating Israel-Iran conflict, with its focus on crippling Iran's energy infrastructure, could have far-reaching implications for global oil prices and stability, as highlighted by the recent bombing of energy facilities and air defense systems.
- Politics surrounding the Middle East's energy sector, already strained by the ongoing conflict, could see a significant shift due to Israel's targeted strikes against Iran's energy infrastructure, potentially triggering a domino effect of conflicts and further geopolitical instability.
