Photo: EPA
The coordinated US and Israeli attacks on Iran, along with Tehran’s retaliatory missile strikes across the Persian Gulf, are already forcing oil traders to halt shipments through the Strait of Hormuz, a critical artery of global oil supply.
Global energy markets are facing one of the most severe shocks in decades. The strikes disrupt oil exports from a region responsible for around 20% of the world’s oil supply, Reuters reports. Explosions were reported in the UAE and Kuwait, both major oil exporters, while Qatar, the world’s second-largest LNG exporter, intercepted missiles aimed at the country. Blasts were also heard in Bahrain and near Iran’s Kharg Island, a terminal that handles about 90% of Iranian oil exports. According to shipping data, Tehran had preemptively moved much of its stored oil onto tankers. So far, no confirmed damage to oil infrastructure has been reported, and official statements on shipping disruptions through the Strait of Hormuz are lacking, though the Iranian Revolutionary Guard has warned ships not to pass. Experts note that even without physical damage, the crisis is already unfolding.
Market reactions
The threat that tankers could be trapped in the Persian Gulf or targeted by attacks is causing producers, traders, and shipowners to rethink transportation routes for oil and LNG. Several major oil companies have reportedly paused shipments through the strait for days. Freight rates for large tankers on the Middle East–China route have already tripled since the start of the year.
Oil prices, which recently approached $70 per barrel—the highest since August 2025—are expected to surge further when markets open. The extent of the shock will largely depend on the duration of the conflict.
A critical global artery
The Strait of Hormuz has never been fully blocked, even at peak tensions, but Iran has the capability to temporarily disrupt shipping. The US Navy is likely to respond quickly, but even short-term attacks or mine-laying could disproportionately impact prices and supplies. Such tactics are not unprecedented: during the Iran-Iraq war in the 1980s, Iran targeted commercial and US naval vessels, prompting President Ronald Reagan to deploy American forces to escort tankers under Operation Earnest Will. In 2007–2008, repeated clashes occurred between Iranian and US naval forces. In April 2023, the Iranian Navy seized the Chevron-chartered tanker Advantage Sweet in the Gulf of Oman, releasing it a year later.
Saudi Arabia, the world’s largest oil exporter, is already adjusting to risks. Kpler reports that the kingdom’s February oil shipments are expected to exceed 7 million barrels per day—the highest since April 2023. OPEC+ plans to discuss production increases this Sunday. Saudi Arabia and the UAE have alternative export routes bypassing Hormuz, though their capacity is limited.
Key uncertainties
Will energy infrastructure—oil fields, terminals, refineries—be directly targeted?
How quickly can the US Navy secure shipping lanes in the Gulf and the Strait of Hormuz?
How far will Iran escalate the conflict under threat to its survival?
The scale and tone of US-Israel strikes suggest Washington is preparing for a prolonged campaign aimed at significantly weakening Iran’s leadership. Even without direct hits on oil infrastructure, the conflict already threatens to disrupt critical energy supplies from the Middle East at levels unseen for decades.
On the morning of February 28, Israeli forces struck multiple targets in Iran, including explosions in Tehran with visible smoke plumes. Hezbollah facilities in Lebanon were also hit. In retaliation, Iran launched dozens of ballistic missiles at Israel and struck a US base in Bahrain. Explosions were reportedly heard in the UAE, Kuwait, and Qatar, where US bases are located.
