Israel's attacks on Iran and Tehran’s retaliation could threaten a fifth of the world's energy supplies.  Concerns are growing over the security of global supply chains of oil, gas and fertilizer as the conflict enters its second week.

Tehran

The ongoing conflict between Iran and Israel has led to attacks on critical energy infrastructure, including oil depots, refineries, and gas fields in both countries. The Strait of Hormuz, a key maritime route through which a fifth of the world's oil, gas, and fertilizer supplies pass, faces heightened risks as Iran has previously threatened to close it in response to existential threats.

Damage to facilities in Iran and Israel has already resulted in the suspension of gas exports and partial shutdowns of major refineries. These disruptions have increased the cost of insuring tankers in the region and could drive oil prices higher. The situation is causing concern among major importers such as the EU, China, India, and Japan, as well as Iran's regional neighbors, about the stability of global energy supplies.

Iran-Israel conflict could disrupt fifth of world's energy supplies

This 33-kilometre stretch of water is one of the world's most crucial energy supply routes. A fifth of the world's oil, fertiliser and gas supplies pass through the Strait of Hormuz. Iran has previously threatened to cut off the maritime bottleneck if it faces what it describes as existential threats. But Israel is attacking Iran's energy infrastructure, including the Shahran oil depot that holds Tehran's main reserves of fuel, estimated to last about three days. Major refineries, including Shahre and the Najafabad oil refinery near Isfahan, are also being struck. The most significant target of the conflict so far, the South Paris field, the world's largest offshore gas reservoir, shared with Qatar. Iran has also struck areas in Israel's port city of Haifa with ballistic missiles and drones, forcing the suspension of exports of gas through Egypt and restricting flows of liquefied natural gas or LNG to Europe and parts of Asia. Iran launched a missile barrage that damaged pipelines and transmission lines at the Haifa oil refinery as well. It was partially shut down. Israel also suspended operations at its Tamar and Leviathan gas fields in the Mediterranean Sea for safety reasons. The EU, China, India and Japan rely heavily on oil from the Middle East and are concerned about the current crisis, as are Iran's regional neighbours. We have to condemn very clearly and the international community has to make it very clear that any targeting of nuclear facilities, any targeting of fuel or energy facilities in this region would have ramifications that are unknown. The third largest oil producer in the OPEC group of oil producers, Iran's exports make up about four and a half percent of global supplies, but oil producers are capable of dealing with supply cuts of that size. Any blockage of shipping routes, though, could restrict supplies and not just oil. The cost of insuring tankers transiting through the Strait of Hormuz has already increased. And any disruption there could further force up oil prices, even above $100 a barrel, according to some estimates. Israel's war with Iran, slowing growth in China and Europe's move away from Russia's oil and gas are all weighing on global trade. Add to that concerns about the reliability of US President Donald Trump's administration as a trading and diplomatic partner and some experts are concerned the world economy could be hurtling towards a perfect storm.

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