Let the missiles fly - How will Israel’s attack on Iran affect you?
After months of rising tensions, Israel has made a dramatic move: initiating direct military action against Iran. On Saturday, 14th June, Israel launched strikes targeting Iran’s domestic energy infrastructure in Tehran—specifically, a processing plant and a gasoline facility. While neither facility directly impacts the global energy supply chain (as they are not involved in oil or gas exports), as energy analyst Javier Blas aptly stated, “the risk is significant: the moment one side starts blowing up energy assets, the other can think about doing the same.”
What is Isreal trying to achieve?
According to journalists and international observers, Israel’s primary objective is to dismantle Iran’s nuclear programme. The International Atomic Energy Agency (IAEA) reported that Iran’s Esfahan nuclear facilities were targeted multiple times on 13th June.
My opinion
If the world is serious about achieving net-zero targets, nuclear power will be a critical component for all countries seeking full decarbonisation. But is it fair that only a select few countries are considered ‘responsible’ nuclear powers while others are branded ‘dangerous’? Given today’s volatile political environment, I believe any country—regardless of current alliances—can quickly become perceived as harmful.
The catastrophic risk of nuclear technology when used as a weapon is well documented. Could Iran’s political elite weaponise this technology? It’s possible. However, based on events over the past year, I believe the likelihood of Israel using such technology to inflict destruction is greater.
What Will This Mean for Global Energy Prices—Short and Long Term?
Recent years have shown that energy markets can react violently even when supply fundamentals remain unchanged.
In the short term, fear and uncertainty will drive prices upwards. The key question is: will prices continue to rise even if no major export facilities are impacted?
In the long term, historical events are often used as reference points when modelling future scenarios. The Iran-Iraq War in the 1980s saw prices fall. The First Gulf War saw prices revert back to average. The Second Gulf War 2 saw prices rise (Super-spiked by Arjun Murti)
Who Will Be Most Affected by a Disruption to Iran’s Exports?
The two largest importers of Persian Gulf-loaded oil—China and India—will bear the brunt of any supply disruption. However, a reduction in Iranian exports would likely trigger a bidding war for spot (non-contracted) oil and gas cargoes, with knock-on effects for Europe and North America.
Iran’s most important defensive weapon - The Strait of Hormuz
While Iran’s oil exports are largely concentrated in Asia, its greatest strategic asset is the Strait of Hormuz—a narrow chokepoint through which a significant share of the world’s energy supply flows. This gives Iran powerful leverage, potentially forcing the West to push for restraint or de-escalation from Israel.
Why Does This Matter?
The Strait of Hormuz handles nearly one-third of the world’s LNG and around 25% of global crude oil exports, much of it from the UAE, Qatar, and Kuwait. Any closure—temporary or prolonged—would drive prices sharply upwards. Tankers would be forced to reroute, increasing shipping distances or passing through more volatile waters.
If both the Strait of Hormuz and Kharg Island were to shut down, analysts estimate that crude oil prices could rise to $120 per barrel—a 57% increase from current levels. That rise would inevitably trickle down to the petrol pump.