The recent coordinated strikes by the United States and Israel on Iran could disrupt global crude oil supplies and drive prices to levels not seen in years, analysts warn. The attacks, targeting Iranian military and government-linked sites, have raised concerns about the stability of key shipping routes and the security of oil infrastructure in the region.
Iran remains among the world’s top ten oil producers, despite a significant decline in output since the 1970s due to repeated rounds of US sanctions. In 1974, Iran produced around six million barrels per day, making it the third-largest producer after the US and Saudi Arabia, ahead of Russia, according to Arne Lohmann Rasmussen. Today, production stands at approximately 3.1 million barrels per day, according to OPEC, while Iran is believed to hold the world’s third-largest crude reserves, giving it strategic leverage in global energy markets.
The greatest threat to oil markets is a potential blockade of the Strait of Hormuz, the narrow waterway connecting Middle Eastern oil producers to the global market. In 2024, around 20 million barrels of crude passed through it daily, representing nearly 20% of global liquid oil consumption, according to the US Energy Information Administration. Analysts note the strait’s narrow width of roughly 50 kilometres and shallow depth of no more than 60 metres makes it highly vulnerable.
“Even a doubt about security in the Strait would prompt many vessels, for insurance reasons, to face difficulties transiting, as premiums would rise sharply,” said Rasmussen. Saxo Bank analyst Ole Hansen added that only Saudi Arabia and the United Arab Emirates possess meaningful bypass infrastructure, which can transport a maximum of 2.6 million barrels per day.
Iranian crude is inexpensive to produce, costing as little as €8.40 per barrel, giving the country a substantial profit margin when prices rise, Rasmussen said. Western producers, including the US and Canada, face production costs ranging from €34 to €50 per barrel. Iran currently exports between 1.3 and 1.5 million barrels daily, with over 80% bound for Chinese refineries due to US sanctions, Hansen noted.
Regional neighbours are also on alert. Countries hosting US military facilities, from Gulf states to Turkey and Pakistan, could be targeted by Iranian missiles, according to Pierre Razoux. Critical infrastructure, including hydrocarbon hubs, power plants, and desalination facilities, is considered at risk.
Rising crude prices could push oil toward €85 per barrel, levels not seen since the start of Russia’s invasion of Ukraine in February 2022. Analysts warn this could reignite inflation and affect the global economy, while also presenting political challenges for President Donald Trump, who has promised American voters affordable energy ahead of the midterm elections.
