On October 13, 2024, speculation regarding potential Israeli military strikes on Iranian oil and nuclear facilities in retaliation for recent rocket attacks has led to a significant increase in global oil prices. Israeli Prime Minister Benjamin Netanyahu faces considerable domestic pressure while U.S. President Joe Biden has urged for calm, suggesting that alternatives to military action should be considered.
In the wake of Iranian attacks on Israel, Brent crude oil prices surged by 17% within a week, reaching $81.16 per barrel. However, prices saw a slight decrease after Hezbollah, an Iranian ally, indicated a willingness to cease hostilities with Israel. Analysts warn that if Israel targets key Iranian oil infrastructure, nearly two million barrels per day could vanish from the global market, raising fears of oil prices potentially exceeding $100 per barrel.
Experts highlight that Iran is one of the world's largest oil producers, but its economy is heavily impacted by international sanctions due to its nuclear program. The Iranian oil export reached a five-year high of 1.7 million barrels in May, with China being the primary recipient. Any disruption to Iran's oil exports could have severe consequences for its economy, which already faces high inflation and unemployment.
The island of Kharg, home to Iran's main oil export terminal, is considered a likely target for Israeli strikes, as it plays a critical role in the country's oil operations. Other potential targets include the Bandar Abbas refinery and the Abadan refinery, both crucial for Iran's oil supply. Analysts suggest that while strikes on these refineries may not drastically increase oil prices, they could exacerbate the suffering of the Iranian population.
Current oil price increases are being managed due to sufficient global supply, but any escalation in regional conflict could quickly change this. Iran has threatened to block the Strait of Hormuz, a vital oil transport route, which could further complicate maritime operations in the region.
While some speculate that tensions in the Middle East may lead to a crisis reminiscent of the 1970s oil crisis, experts argue that the current global energy landscape is different, with increased production from other countries mitigating potential impacts. Analysts believe that an Israeli attack on Iranian economic resources could adversely affect the global economy, especially if it leads to higher energy prices.
As the U.S. presidential elections approach, experts suggest that Israel's retaliatory measures may be more symbolic, aimed at avoiding escalation that could provoke regional conflict or U.S. intervention. The lack of communication between Iran and Israel raises the risk of miscalculation, making the situation precarious.