After Israel decimates the command of Iran’s military forces in his, reports since last Saturday indicated that the Iranian energy infrastructure was under attack. Meanwhile, Tehran warned that the closure of the Strait of Ormuz, a critical point in global energy trade, was being considered. Oil prices fired last Friday, and the climb of the conflict between Israel and Iran can raise them even more in the coming days.
The conflict between Israel and Iran is about to include economic targets, while both sides seek advantage in the rapidly intensifying attacks series.
After Israel decimates Iran’s military forces in their first wave of air attacks, reports on Saturday indicated that Iranian energy infrastructure was under attack. This includes the South Pars gas field, considered the largest natural gas reservoir in the world, as well as oil refineries.
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This occurs while Israeli Prime Minister Benjamin Netanyahu warned on Saturday: “Let’s attack all places and all targets of the Ayatollah regime,” after having ureately urged the Iranian people to overthrow their government.
On Friday, Israel’s Minister of Defense said Iran crossed “Red Lines” by launching their missiles into civil areas as part of their retaliatory attacks.
Former Under-Secretary of State Wendy Sherman told Bloomberg TV who believes this is a sign that Israel will aim at Iran’s oil and economic infrastructure.
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Meanwhile, Tehran’s retaliation could extend similar to energy markets. Although Iran launched hundreds of missiles and drones against Israel, analysts observed that it has few viable military options and their general capabilities were severely degraded by Israel.
An Iranian parliamentarian said the closure of the Strait of Ormuz, a critical point in global energy trade, is being seriously considered. The equivalent of 21% of the global consumption of oil fluid, or about 21 million barrels a day, goes through the narrow.
This could further increase oil prices, after they rose 7% on Friday to more than $ 70 per barrel, while markets reacted to the early stages of the conflict between Israel and Iran.
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In a note on Saturday, George Saravelos, Deutsche Bank’s exchange rate research research, estimated that the worst scenario, a complete interruption in the provision of Iranian oil and closing of Ormuz Strait, could bring the price of oil to over $ 120 per barrel.
Such a closure could involve the use of mines, patrol boats, aircraft, cruise missiles and diesel submarines, while the release of the narrow could take weeks or months.
“Given the significant global implications of such a closure, we believe that the potential closure of the narrow will probably be maintained as a last resort and will only be considered in extreme situations,” added Saravelos.
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In a column in the magazine Foreign Affairs On Friday, Kenneth Pollack, former CIA’s Persian Persian Gulf Annist and former director for Persian Gulf Affairs on the National Security Council, said there is a low likelihood that Iran closes the narrow.
This is because Iran would quickly move from a “sympathetic victim to a dangerous enemy in the eyes of most other countries,” while Western countries and perhaps even China would use strength to reopen the narrow, he predicted.
“And Tehran would have to worry that such a reckless threat to world economies would convince Washington that the Iranian regime needed to be removed,” Pollck added. “This fear is certainly greater with US President Donald Trump – who ordered the death of Iranian General Soleimani in January 2020 – back to office.”
This article was originally published on Fortune.com
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