Israel strikes Iran's energy infrastructure: Translated and paraphrased: Israel Launches Assault on Iran's Energy Infrastructure.
Last week sent shockwaves through the oil market as prices surged almost 11% due to a dramatic escalation of tensions between Israel and Iran. The sharp rise was sparked by a series of aggressive attacks on Iranian soil involving both military and nuclear infrastructure. Israel, long-threatening such action, launched a series of massive airstrikes that claimed numerous casualties among both civilian and military personnel, including high-ranking members of the Iranian military and the Islamic Revolutionary Guard Corps (IRGC), as well as nuclear scientists. According to Iran's Health Ministry, as of morning on June 16, the death toll reached at least 224, with more than 1277 injured, many of them civilians, including children.
In response, Iran fired back, targeting Israeli territories with rocket and drone attacks, resulting in more casualties among the civilian population despite not being on par with Iranian losses. The back-and-forth has been ongoing for several days, and despite global calls for a ceasefire, it seems both parties are in no rush to end the hostilities. Tehran has expressed openness to diplomatic solutions but insists that Israel must halt its attacks on Iranian territory for peace talks to take place. For example, on June 15, Iranian Foreign Minister Hossein Amir-Abdollahian stated their readiness for dialogue if Israel stops committing aggressions in Iran.
Trump-style bravado dominates diplomatic dialogues, with Donald Trump touting his efforts to bring about a peace between Israel and Iran on his Truth Social platform. "Peace is coming between Israel and Iran. There are many meetings and phone calls happening. I'm doing a lot, but nobody ever notices. No big deal, the people get it," he wrote enthusiastically.
The potential for Iran closing the Strait of Hormuz, through which about a third of global LNG shipments and over 20% of crude oil pass, has sent oil prices skyrocketing. However, the situation hasn't been limited to a short-lived spike, as the ongoing attacks on each other's territories have kept oil prices on the rise since the conflict began this week. The Israeli Defense Forces (IDF) list a wide range of targets in Iran, including military-industrial complexes and energy infrastructure. For example, on Saturday evening, Israeli airstrikes and drone attacks ignited a fire at a major oil storage facility near Tehran. Drone attacks were also launched on a petroleum refinery in the province of Bushehr, and the enormous South Pars gas field—the world's largest—was also targeted.
According to most experts, the Israeli air raids on Iranian energy facilities caused oil prices to increase approximately 1% on Asian exchanges on June 16 and brought them very close to $75 per barrel. The long-term oil price trajectory will depend on Israel and Iran's continued strikes on each other's territories. Iran is a major oil producer, holding a strategically vital position. It could potentially cut off the Strait of Hormuz, thereby isolating oil-producing countries in the Persian Gulf from the rest of the world. According to data from ClearView Energy Partners, even a temporary closure of this strait would result in oil prices rising by $8 to $31 per barrel.
"The escalation of the conflict between Israel and Iran poses multiple risks and threats to oil supplies, but the greatest danger likely lies in the closure of the Strait of Hormuz for tankers," wrote analysts at ClearView Energy Partners on June 14.
Although the risk of closure exists, it seems Tehran prefers to avoid it altogether, as numerous tankers passing through the Strait carry Iranian oil, with China being the main buyer.
- The escalating conflict between Israel and Iran has prompted concerns within thereal-estate sector, as the ongoing tension could potentially disrupt international finance and investments, especially in residential properties.
- The energy sector has also been significantly affected, with the potential closure of the Strait of Hormuz threatening to increase oil prices significantly, reaching almost $75 per barrel as of June 16.
- The volatile political climate between Israel and Iran is causing ripples in various industries, with investors closely monitoring developments, particularly in the finance and energy sectors, to assess potential impacts on their investing decisions.
