Will Israel's strike on Iran's oil industry lead to global crisis?
A few days ago, former Israeli Prime Minister Ehud Barak suggested that Israel may launch a massive and repeated attack on Iran’s oil infrastructure.
In an interview with the British newspaper The Guardian, he stated that Israel could carry out a large-scale strike on Iran's oil facilities. This statement has caused concern not only among former but also current politicians. For example, the Axios portal reports that Israeli officials have disclosed plans to deliver a significant retaliatory strike, possibly targeting Iran's oil production facilities and other strategic assets.
These statements have sparked a serious discussion about who would suffer from the destruction of Iran’s oil industry and how this would affect global oil prices. As is well-known, oil prices are a critical indicator of the state of the global economy and international relations. Many global processes depend on fluctuations in oil prices, and this remains true despite ongoing talks about decarbonization and the green energy transition.
The interests of the world’s largest countries are tied to oil, and perhaps this is why Israel has not yet acted on its threats. A strike on Iran's oil terminals, particularly on Kharg Island , would have severe consequences. This is Iran's primary export hub, from which 90% of its oil is shipped. In September 2024, Iran exported a record 2 million barrels per day, accounting for nearly 2% of global supply. The destruction of this infrastructure could lead to serious disruptions in the global oil market.
However, the key issue is not only the volume of exports but also who buys this oil. China is the largest importer of Iranian oil. In 2024, almost all of Iran's export shipments went to China, with Iranian oil accounting for around 10% of China’s total oil imports. The destruction of Iran’s oil infrastructure would hit China hard, and it is unlikely that Beijing would ignore such a development.
This situation is somewhat reminiscent of Russia’s gas business, which continues despite the ongoing war. Russian gas still flows through Ukraine, and Ukraine has not targeted this infrastructure, despite the conflict. Here, we can see how the threat of an energy crisis compels all parties to act with great caution. Everyone understands that the destruction of Iran’s oil industry would lead to a sharp rise in oil prices and could spark a new global crisis.
Israel has no desire to provoke China. Beijing maintains neutrality in the Middle East conflict and even puts forward peace initiatives. China is genuinely interested in ending the war, as it negatively impacts its economic interests, trade, and logistics. However, the threat of an energy crisis could significantly strain relations with China.
Earlier this year , Iran raised oil prices for China, causing Chinese imports of Iranian oil to drop to a 11-month low. However, in July, China ramped up its purchases of Iranian oil to a maximum, albeit through independent refineries, avoiding direct violations of U.S. sanctions. For China, Iranian oil remains the cheapest option, despite the risks involved with sanctions.
Although analysts predict a rise in oil prices in the event of a strike on Iran, they do not foresee a global shortage or crisis. Oil production is increasing in the U.S., Canada, Brazil, and other countries. The International Energy Agency forecasts a rise in global oil production by 1.5 million barrels per day by 2025, which would help cover any potential shortfall.
We will continue to monitor the situation as it unfolds.
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