GlobalData Energy
5 min read
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On 13 June, Israel launched an unprecedented wave of airstrikes on Iran, to which Tehran responded with hundreds of ballistic missiles fired at Israel. Panic ensued, reflected in prices, as benchmark Brent crude oil prices jumped 10% to over $77 a barrel by the start of the next week, amid a plethora of potential supply risks and uncertainty.
The GlobalData Oil & Gas Research team addresses the main concerns and calibrates the market’s potential reaction to the Israel–Iran hostilities, looking to understand the Strait of Hormuz closure risk, the impact on Iran’s oil infrastructure, the collateral effects on Egypt and Jordan, Insurance premiums and proxy escalations
The likelihood of a complete closure of the Strait of Hormuz remains very low. Currently, around 30% of global seaborne oil trade and 20% of liquefied natural gas (LNG) shipments pass through this strategic chokepoint. Approximately 80% of oil and LNG exports from Gulf countries are shipped to Asian markets via the Strait, and all of Iran’s oil exports to China also rely on this route. For Iran, there is no practical incentive to block the Strait, as it is an economic lifeline for the country: about 80% of its imported goods transit through this passage. Any move to close it would therefore jeopardise Iran’s trade flows, as well as broader regional exports.
Most of Iran’s crude oil exports are shipped from Kharg Island in the Gulf. At present, the risk of a direct attack on the island appears limited, and even if targeted, such an action would likely be insufficient to halt Iran’s oil exports entirely, as the island hosts multiple export terminals. Moreover, Iran has alternative export routes, including other ports such as Bandar Abbas and Bandar Mahshahr.
The most notable alternative is the Jask pipeline, which bypasses the Strait of Hormuz and connects the western oil-producing regions to an export terminal on the Gulf of Oman. This pipeline was used to ship Iran’s first crude cargo via Jask in October 2024. However, its export capacity is significantly lower than Kharg’s terminals and does not support blended exports, so it could only serve to stabilise temporary disruptions and meet key deliveries. Iran’s exports, primarily headed to China, are controlled through unofficial channels, using ship-to-ship transfers and reflagging and are unlikely to be affected by further sanctions. In fact, the escalating US-China trade tension provides a solid offtake for Iran’s oil production.
