The ongoing conflict between the U.S., Israel, and Iran is affecting energy markets, leading to increased oil and gas prices in the U.S. and worldwide. Experts warn of potential severe impacts if Iran targets regional energy infrastructure or impedes shipping through the Strait of Hormuz.
The conflict, now in its third day, has resulted in hundreds of casualties in Iran, including Ayatollah Ali Khamenei. In retaliation, Iran has targeted various regional sites, including energy facilities. Saudi Arabia’s Ministry of Energy reported limited damage to its Ras Tanura oil refinery after drone interceptions. QatarEnergy announced a halt in liquefied natural gas (LNG) production following military strikes on two facilities.
Approximately one-fifth of global oil and LNG supplies traverse the Strait of Hormuz, connecting the Persian Gulf to the Arabian Sea. On Sunday, only five oil tankers passed through the strait, compared to the pre-conflict average of 60 daily, according to S&P Global Energy.
Analysts suggest that while short-term market impacts are manageable—with global oil prices rising about 7% on Monday—prolonged disruptions could lead to historic oil supply challenges, according to Jim Burkhard, vice president and head of crude oil research at S&P Global Energy.
Daniel Sternoff, senior fellow at Columbia University’s Center on Global Energy Policy, noted that lasting disruptions would significantly affect global gas markets, especially in Asia and Europe, due to smaller gas inventories compared to oil. The U.S., being the largest gas producer and a net exporter, would be relatively insulated.
The main concern, Sternoff stated, is whether Iran escalates attacks on oil and gas facilities in the region, potentially using energy markets as leverage.
Sustained increases in crude oil prices could lead to higher gasoline costs. Unlike natural gas, American consumers are fully exposed to global oil market fluctuations. Despite being a net oil exporter, the U.S. still imports significant crude volumes.
Alan Krupnick, from Resources for the Future, suggested that short-term high prices may have limited impacts but prolonged elevation could influence climate change and fossil fuel production. Higher gasoline prices might accelerate electric vehicle adoption but also incentivize U.S. oil drilling. U.S. domestic oil production saw declines in December, as per the U.S. Energy Information Administration.
Environmental advocates argue that the volatility of fossil fuel markets underscores the need for cleaner energy sources, with the conflict in Iran potentially increasing energy costs globally.
Original Story at insideclimatenews.org