In the last 72 hours the world has changed in a significant way, that still might not be apparent to many.
Glancing at the Wall Street Journal this morning I see the usual war-porn visuals of exploding boats, planes and installations, assurances from US military sources that Iranian assets are being degraded, followed by a significant paragraph.
Despite the strikes, Iran is still believed to have a vast stockpile of mines, cruise missiles on trucks and hundreds of undamaged boats in hidden facilities with deeply dug tunnels along the coast and on islands, said Farzin Nadimi, an expert on Iranian defenses at the Washington Institute for Near East Policy.
“I think it will take weeks to reach a point where there can be safe operations in the strait,” he said. “Even then, a lot of the Iranian assets will survive.”
Iran has attacked dozens of vessels in the strait, often with small, unmanned boats carrying explosive charges or airborne drones. Other ships have been hit by projectiles, in the strait and in the Gulf of Oman and the Persian Gulf.
Iran has all but blocked shipments through the Strait of Hormuz — a narrow waterway that handles around a quarter of global seaborne oil trade and a fifth of liquefied natural gas supply. It’s also targeted energy infrastructure across the Gulf, and launched an intense waveof attacks after its own South Pars gas field was struck by Israel.
Damage to the region’s oil and gas assets means exports could take longer to return to normal even once the Strait of Hormuz reopens. A significant chunk of Qatar’s LNG production facilities face a yearslong recovery from missile strikes.
Gulf oil producers have reduced their output as storage fills up onshore and in tankers at sea. They’ve cut production by at least 10 million barrels a day, according to the International Energy Agency, equivalent to more than half the crude that normally transits through Hormuz.
Financial Times:
The Iran war has caused the gravest energy shock of all time, the head of the International Energy Agency warned, adding that it could take six months or longer to fully restore oil and gas flows from the Gulf. Fatih Birol, whose role at the IEA has put him at the heart of efforts to keep energy flowing despite the loss of one-fifth of the world’s oil and gas, told the FT the conflict was “the greatest global energy security threat in history”.
Birol, who also helped shape Europe’s response to a gas crisis following Russia’s full-scale invasion of Ukraine, said the volume of gas that has been cut off by the fighting is twice as much as Europe lost from Russia in 2022. More oil has been lost, he added, than during the twin shocks of the 1970s that triggered recessions and fuel rationing around the world.
He spoke after a week in which oil prices rose to almost $120 a barrel as both Israel and Iran fired waves of missiles at vital energy hubs in the Gulf, including the South Pars gasfield and Qatar’s immense Ras Laffan complex.
But he said politicians and markets were still underestimating the scale of the crisis.
The problem would grow bigger every day that flows of energy from the Middle East, which exports one-fifth of the world’s oil and gas, were trapped by Iran’s de facto blockade of the Strait of Hormuz.
“People understand that this is a major challenge, but I am not sure that the depth and the consequences of the situation are well understood,” he said in an interview.
Unlike during previous oil shocks, renewable power is now competitive with fossil fuels in many places. More than 90% of new renewable power projects worldwide in 2024 were cheaper than fossil-fuel alternatives, according to the International Renewable Energy Agency.
Oil is used in many industries beyond generating electricity, such as fertilizer and plastics production. So most countries are feeling the impact, while those with more renewable power are more insulated since renewables rely on domestic resources like sun and wind, not imported fuels.
“These crises regularly occur,” said James Bowen of the Australia-based consultancy, ReMap Research. “They are a feature, not a bug, of a fossil fuel-based energy system.”