U.S. Strikes in Iran and the Potential Impact on Global Oil Supply
Recent U.S. And Israeli military strikes against Iran pose significant risks to global oil markets and, by extension, the world economy. Although the full extent of the impact on oil production and trade remains uncertain, concerns have been escalating for weeks, particularly regarding potential disruptions to supply and Iran’s possible responses.
Current Market Concerns
Trading markets were closed on February 28, 2026, delaying a clear quantification of the impact on oil prices. However, crude prices had already been rising in anticipation of potential attacks and the resulting threats to oil supplies. Despite U.S. Sanctions, Iran remains a significant oil exporter, managing to ship around 1.9 million barrels per day as of December 2025, according to the International Energy Agency .
Iran’s Oil Exports and China
Much of Iran’s exported oil is destined for China and is transported via “shadow ships” – tankers that conceal their activities to circumvent sanctions. The U.S. Has increased enforcement against these shadow fleets, but China appears relatively insulated from potential disruptions due to its substantial strategic and commercial reserves. Antoine Halff, chief analyst at Kayrros, a climate and environmental analytics firm, stated that removing Iran from the equation wouldn’t necessarily cripple the global oil supply, stating, “You take Iran out, you’re not really starving the rest of the world.”
The Strait of Hormuz: A Critical Chokepoint
A primary concern for oil markets centers on how Iran might retaliate. Raad Alkadiri, a managing partner at 3TEN32 Associates, a political risk consultancy, highlights the potential for “spillover effects.” Iran controls the Strait of Hormuz, a vital shipping route through which approximately 20 million barrels of oil and oil products pass daily – roughly 20% of global oil demand, including shipments from Saudi Arabia and Iraq. Any closure of the Strait would immediately and dramatically impact global oil prices.
Current Oversupply and Past Responses
Currently, the world is experiencing an oversupply of oil, which has helped to moderate price increases despite mounting concerns. During previous periods of heightened conflict between Iran and Israel, both sides avoided targeting oil production or export facilities and the Strait of Hormuz remained open, maintaining relative price stability. However, a prolonged closure of the Strait would represent a significantly different scenario.
Worst-Case Scenarios
According to Halff, the most concerning scenario for oil markets involves Iran striking its neighboring producer countries, including Saudi Arabia, Kuwait, the United Arab Emirates, or Qatar. He suggests that the likelihood of such retaliation is significant and would have a far greater impact than disruptions to Iran’s own oil exports.
Asaluyeh and Iranian Oil Infrastructure
Asaluyeh, a city in Bushehr province, Iran, is a key location for Iran’s oil infrastructure, serving as the land-based facilities for the Pars Special Energy Economic Zone (PSEEZ). Established in 1998, Asaluyeh has grown from a village to a city with a population of 13,557 as of 2016.