Tensions between Israel and Iran have reached new heights, sending ripples of concern throughout the global oil industry. As military confrontations intensify in the Middle East, the world’s leading oil executives and market analysts are warning of the growing risks to energy security and price stability.
The recent exchange of strikes—sparked by Israel’s targeting of Iranian military and nuclear sites—has not only escalated regional hostilities but also raised the spectre of disruptions to vital oil and gas infrastructure.
Although both Israeli and Iranian energy facilities have experienced some damage, the most crucial pipelines and export terminals have, for now, avoided direct hits. Nevertheless, the possibility of further escalation remains a pressing concern.
Industry leaders have voiced particular anxiety about scenarios in which Iran might attempt to impede the flow of oil through the Strait of Hormuz, a narrow waterway through which nearly a fifth of the world’s crude oil is shipped. Any interruption, even temporary, could have dramatic consequences for global energy prices and supply chains, as highlighted by the International Energy Agency and numerous market observers.
Oil prices have already responded to the heightened uncertainty, with Brent crude and West Texas Intermediate futures both climbing in recent days. Brent has recently traded near $75 per barrel, while WTI has approached $74, reflecting a risk premium as traders brace for potential supply shocks. This surge comes amid memories of previous geopolitical crises, such as the Russian invasion of Ukraine, which similarly sent energy markets into turmoil.
Executives from major oil companies have not minced words about the gravity of the situation. Shell’s Wael Sawan described the past several days as “very concerning … both for the region but more broadly in terms of where the global energy system is going given the uncertainty and the backdrop that we see right now and the geopolitical volatility.”
At the same time, TotalEnergies’ Patrick Pouyanné emphasised the importance of protecting employees in the region, stating, “We are the largest international oil company in the region. We were born 100 years ago in Iraq, and we still have operations in Iraq, Abu Dhabi, Qatar and Saudi Arabia.”
Pouyanné further warned that any attacks on oil installations could have “a real problematic hit, not only in terms of safety and hazards and risks, but also in terms of global markets.”
The conflict has also prompted some shipping companies to reroute tankers away from the Persian Gulf, leading to increased insurance premiums and transport costs. While many analysts believe that Iran is unlikely to fully close the Strait of Hormuz—given the logistical and diplomatic challenges involved—the mere threat is enough to unsettle markets.
The United States and its allies have already increased their naval presence in the area to deter any attempts at disruption, according to reports from Reuters and the Financial Times.