Brent crude oil prices remain around $100 per barrel. Efforts by consumer nations to release oil from national strategic reserves have failed to lower prices, as no such release can compensate for the market void created by the closure of the Strait of Hormuz. Meanwhile, pressure from the United States and the international community to reopen the crucial shipping route continues to grow, as Iran’s effective blockade of the chokepoint enters its 24th day.
Since the beginning of the Iran-Israel-US war, vessel traffic through Hormuz has dropped to less than one-eighth of the pre-war daily average. If the situation persists, oil and commodity prices could spike further, potentially pushing the world toward recession and another economic crisis.
At the Monday market opening, US President Donald Trump wrote on his Truth Social platform, “I am pleased to report that the United States of America, and the country of Iran, have had, over the last two days, very good and productive conversations regarding a complete and total resolution of our hostilities in the Middle East.”
Trump also announced a five-day pause on planned strikes against Iranian energy infrastructure. The pause followed an ultimatum issued on Saturday, warning of strikes on Iranian power plants if the Strait of Hormuz was not reopened within 48 hours, after Iran threatened retaliation against regional energy facilities if its own infrastructure were attacked.
Iran, however, swiftly rejected Trump’s claims. Foreign Ministry spokesperson Esmail Baghaei stated, “There have been no negotiations with the United States” since the war began on February 28. He added that Tehran had received messages from “some friendly countries” regarding the US request for talks to end the conflict.
Regional damage
According to the Armed Conflict Location and Event Data Project (ACLED), which tracks military incidents, between February 28 and Sunday, March 22, a total of 3,538 strikes were recorded in the Iran-Israel-US war. As of Sunday, the US and Israel reportedly conducted over 2,100 events inside Iran, while Iran and its aligned armed groups launched around 1,400 retaliatory actions.
Of the total strikes, 77 targeted energy infrastructure - including oil and gas fields, refineries, and energy industries - affecting not just belligerents but also the energy sectors of Azerbaijan, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, the United Arab Emirates, Iraq, and the Kurdistan Region.
While attacks on oil and gas infrastructure accounted for just two percent of total strikes, their economic impact is significant. The World Trade Organization warns that if oil and gas prices remain at these levels, global GDP growth may need to be revised down by 0.3 percent.
Fatih Birol, head of the International Energy Agency (IEA), on Monday highlighted the scale of disruption, stating, “This war has removed twice as much oil and gas from markets as previous conflicts. In 1973 and 1979, about 5 million barrels were removed from global markets, and during the Russia-Ukraine war, 75 billion cubic meters of gas were lost.”
The leading energy economist further noted that in this conflict, “daily shortfalls amount to 11 million barrels of oil and 140 billion cubic meters of gas,” in addition to “the damage sustained by energy infrastructure, which will take three to five years to return to pre-war production levels.”
In Iraq and the Kurdistan Region, attacks on energy infrastructure have halted production of roughly three million barrels in Iraq and 300,000 barrels in the Region. Key incidents include the March 5 strike on the Sarsung field in Kurdistan’s Duhok province, and the March 6 attack on foreign oil workers and the March 16 attack on the Majnoon field in Iraq’s southernmost Basra province. These attacks have significantly hampered investment and operations in the sector.
Strategic reserves
Following the closure of the Strait of Hormuz, a Wednesday attack on the North Dome gas field - known as the South Pars on the Iranian side - once again sent energy markets into further turmoil, more than doubling gas prices, just as oil prices surged. The North Dome field is considered the largest natural gas (LNG) field in the world and is located in the Gulf. It spans an area of 6,000 square kilometers and holds more than 900 trillion cubic feet of economically recoverable reserves.
The city of Ras Laffan in Qatar was established in 1996 specifically to develop the North Dome gas field and is considered the engine of the country’s economic growth. This industrial city is jointly operated by Qatar Petroleum and major international companies, including American ExxonMobil, French TotalEnergies, British Shell, and Japan’s Mitsubishi. The field employs approximately 115,000 workers and, through 208 wells, supplies large quantities of gas annually to global markets - particularly Europe and Asia - accounting for 19 percent of the world’s LNG.
On the Iranian side, the South Pars gas field - the Iranian portion of the same reservoir - is considered an economic lifeline. Iran’s share of the field is estimated at approximately 500 trillion cubic feet, of which 360 trillion cubic feet are currently in production.
Negotiation uncertainty
Once again, all eyes are on the negotiations. On Monday, Trump said, “We may reach an agreement even before the specified five-day deadline ends.” In contrast, the Iranian side is denying that any talks are taking place between Washington and Tehran.
The market situation, price volatility, and energy infrastructure face another five difficult days, as it remains unclear whether an attack on Iran’s electricity infrastructure will occur - and if it does, what consequences it will have for the energy industry across the Gulf and Iran. This region holds 48 percent of the world’s oil reserves and 40 percent of its gas reserves and produces 31 percent of the world’s oil and 18 percent of its natural gas.
Brent crude and the oil market reacted to Trump’s post and remarks today. In the short term, prices declined by 12.96 percent to $96 per barrel but soon returned to around $100.
For this reason, the threats to global energy supply chains posed by this war have led the IEA, in its latest report, to call on countries to shift their demand away from oil - particularly the amount used for transportation - since it has not been possible to offset the gap created by the closure of the Strait of Hormuz through the release of 400 million barrels to lower prices and ease pressure on energy security.
Ultimately, whether energy infrastructure is targeted by Iran or by the US and Israel, and regardless of the stated purpose, the impact on global energy security remains significant and energy price volatility could easily translate into broader economic instability and may become a key driver of slower global economic growth this year.