This unprecedented, unlawful attack on Iran will have an accumulated pile of fractured geopolitical factors that will have a long-lasting impact on the world oil market and global economy. Geopolitical uncertainty and price volatility will have a profound and devastating impact that will hamper the markets in the medium to long term. The Zionist regime has attacked five countries during the past six months. Palestine, Lebanon, Syria, Yemen, and now the Islamic Republic of Iran have been attacked by this regime, and all with the support of the United States of America and the European Union. This region produces and supplies two-thirds of the world’s oil needs. Such ferocious and violent actions will have long-term ramifications for the consuming nations. Most of the Middle Eastern oil goes to Asian countries. China, India, Pakistan, countries of the ASEAN consume the bulk of this oil. The Zionist regime and the Western countries do not use this oil. As such, they are not the countries that suffer from long-term disinvestment and insecurity in this critical region.
Asia imported 86 % of the Middle Eastern oil in 1Q 2025. Asian countries also bought 82 % of the region’s gas.
Most international media outlets are interested in the global oil prices. They are traditionally attracted to oil prices and oil shocks. There’s much less attraction for gas prices. Europe imports LNG from Qatar and the United Arab Emirates. LNG prices are soaring, but headlines aren’t interested in reporting, and Europeans prefer to attribute gas price hikes to the Ukraine war.
Strait of Hormuz
Iran has proven time and again that the oil, gas, and energy doctrine of the Islamic Republic is based on demilitarization and depoliticization of the energy sector. For Iran, energy is not a weapon or warfare of choice. As one of the founding members of the Organization of Petroleum Exporting Countries (OPEC), Iran has repeatedly proven and confirmed that accessibility and affordability are the country’s most revered policies towards the global flow of oil.
Iran has repeatedly expressed its concerns over the unjust use of sanctions and price cap mechanisms used by the United States of America and other countries as a political and weaponry tool to intimidate other countries. Such practices have long-term adverse consequences on the principles of international energy justice advocated by OPEC (Charter of Cooperation).
Iran’s government was under pressure from several sources to apply some sort of blockade on the Strait of Hormuz. The Zionist regime tried to push Iran towards that objective to internationalize and further militarize the war in the Persian Gulf region. Tel Aviv misread Iran’s determination towards global oil supply security. However, as I will explain shortly, the international Security Assessment Firms have already raised their risk assessment scenarios that raise concerns over the long-term investments and involvement of companies in the whole region. Any non-market-oriented policy in the global oil market will have long-term ramifications for the geoeconomics of oil and energy, leading to insecurity of energy production and supply.
Short-Term Price Projection
International Netherlands Group, ING, which is the largest oil and derivatives trading house in Europe, has raised its May 2025 price projection from $65-70 range in the short term to $80-84 per barrel by the 4Q 2025. Nevertheless, credible sources estimate a sharp rise in crude oil prices in the three-digit vicinity of $110 to $120 per barrel if the Zionist regime continues its air strikes.
According to the World Bank Report, published on 18 June, the world oil demand is expected to grow to 105.6 million barrels per day during the second half of 2025. The World Bank report concludes that once global oil demand exceeds the 109 to 110 million barrels per day threshold, the current capacity expansion projections will not cover the demand. The global supply security and affordability will be critically undermined. I will deal with this shortly.
The Zionist regime has shown that it can go to any extent and hurt everyone to achieve its goals. On Monday, 30 June, the Zionist regime’s air forces struck the Phase 14 South Pars gas field in Iran. A joint gas field shared between Iran and Qatar. There was a short disruption in the operation in phase 14 of the South Pars gas field that was reversed and returned to normal, even though the Zionist regime forces were still in the sky. Nevertheless, Chevron instantly lost 1.2 % and Exxon lost 1.7 % of their share values in the Global S&P when the markets opened on Monday, June 16. This was underreported and ignored by most mainstream news outlets. However, it clearly shows that the international energy markets are on the brink. Extremely sensitive and suspiciously silent on the share values of major oil and gas companies and investment partners, and prospects in the Middle East. Many major energy companies contemplate moving to South America and Africa to substitute the Middle East due to bleak prospects created by the Zionist regime’s policy of aggression against other nations. Having said that, the insurance rates for tanker crude carriers are high. The mild impact of the crisis is not exactly from price shocks, but from insurance and freight. Nevertheless, dark fleets that are engaged in US-led sanctions on oil add more to the costs due to ship-to-ship operations that engage the capacity of tankers.
By attacking Iran’s energy facilities, the Zionist regime spread the aggression from the military to the energy zone. This indicates that Tel Aviv has no respect for the energy security of nations. However, Iran had to retaliate by striking refineries in the occupied Palestine.
In the meantime, as currently marked fundamentals suggest, global oil markets are sufficiently supplied. Iran is loading over 1.7 million barrels per day to international destinations. OPEC+ is doing its job in maintaining the security of supply to the world markets. Storage tanks are full in major consumption centers. China’s strategic petroleum reserves (SPR) are at a year’s high, exceeding 1.2 billion barrels, which is sufficient to compensate for nearly three months, even if there are no oil imports. This level of SPR and commercial inventories is more than double that of America. As for Europe, they are the traditional loser of any energy disruption.
Long-Term Ramifications
The Zionist regime’s hostilities with Iran have been ongoing since the inception of the Islamic Republic in Iran. The Zionist regime seems to have US foreign policy as a hostage. On 17 June, a loaded US plane with missiles and ammunition that had landed in Kiev military airport and had unloaded parts of its cargo was instructed to load back, pack, and fly to Tel Aviv. The Zionist regime had already run out of enough military hardware, and the United States had to immediately supply the required equipment to the Zionist regime.
The war against Iran will lead to a permanent volatility in the global oil markets, where both producers and consumers suffer. Volatility will be the new normal. When we talk of volatility, we don’t mean very high oil prices or very low. International oil markets have already experienced very high and very low oil prices and survived. Volatility and uncertainty a situations where major stakeholders remain undecided for some time. Even the period of indecision is not known to major participants.
Such a stage basically disillusions investors. They miss the track. Such a situation is valid for conventional oil as well as shale oil.
Beyond the Barrels
On the diplomatic front, Beijing was the first capital that wasted no time to come up and condemn the airstrikes on Iran. The Chinese president was in the Central Asian Republic of Kazakhstan for the annual Shanghai Cooperation Organization ( SCO). The Organization traditionally works with consensus, that is to say, that for every decision, all members should agree. In this summit, all SCO members condemned Tel Aviv in a strongly worded statement. Pakistan went as far as threatening the use of atomic weapons if Iran were attacked by Tel Aviv with a nuclear weapon. However, distanced itself from the SCO Summit and made it clear that they weren’t part of the statement.
A similar configuration was noticed within BRICS, which is now a formidable force on the world stage today. They came up with full support of Iran without India. China is engaged in a quiet but serious energy diplomacy in the South. China relies on the Middle East for as much as 45 % of its oil imports.
As mentioned earlier, the escalating tensions between the Zionist regime and Iran will hit business confidence in the Persian Gulf Cooperation Council, the GCC, with the rest of the region and the world. The latest geopolitical risk report by S&P Global Ratings and its the warning that goes as long as a warning of a trickledown effect that could impact the region’s IPO pipeline and put valuations at risk.
As of the time of writing this article, no Initial Public Offering (IPO) has yet been delayed since the air campaign against Iran began. However, all analysts share the vision that the risk premium has been upgraded permanently. IPO for National Oil Companies, like Aramco, ADNOC, and Kuwait Petroleum Company, are expected to be less attractive for international investors. Investors will think twice before making any decisions to buy shares from IPO ventures.
Energy Diplomacy
Most analysts and market observers are puzzled and trying to figure out how and why conflicts and crises as huge and unprecedented as attacks on Iran do not reflect themselves in oil price hikes dramatically. Heightened geopolitical risks have mostly been viewed in terms of high oil prices. Long-term factors are often neglected. The structure of global oil markets has changed, undergone a significant transformation. The United States is self-sufficient in oil production and has even posed as a major oil exporter. America needs the Middle East, not for its own energy needs and safety, but in order to make sure that China and other major economies’ consumption is rationed and controlled by the United States.
Prices do rise instantly, but over time, and are related to insurance costs and freight. There are currently some 6500 oil tankers floating the international waters daily. No new ULTRA Large Crude Carrier (VLCC) has been built since 2005, and five new VLCC tankers have been built since then. Tanker fleets are aging fast, and no replacement anytime soon. This is happening under the pretext that the oil age would be coming to an end by 2035. A lie that has engulfed the energy industry since the Paris Climate Accord and the emergence of environmentalists in Europe in the early 2000s.
In the meantime, the Middle Eastern governments also rely on America for their safety and survival. The US is in the business of weaponizing the economy and energy at will. When investors flee the Persian Gulf region, they end up in America, where capital and investments are in dire need.
I should reiterate that the fundamental factor in physical crude oil is outdated, but the future markets work on capacity factors. The market hedging relies on what volume of physical oil that will be made available a decade from today.
Middle East and Beyond
The world economy is teetering. Manufacturing data and traveling patterns that demonstrate the performance of economic growth remain sluggish. On top of the US economy is in a disastrous shape.
As of the Federal Reserve Bank Board report of May 2025, the country’s debt stood at $38.6 trillion. To put this number into perspective, the US national debt has risen steadily over the years. The debt-to-GDP ratio, which measures the country’s ability to pay down its debt, has been rising, reaching nearly 100 percent. On a per capita basis, every American citizen is under $106,117 in debt. The annualized cost of servicing the debt is over $1.5 trillion, i.e., 16 % of total federal spending.
Those kinds of statistics mean that the US economy is shattered. The sole source of the strength of the American economy is the dollar as the universal currency. No country can afford such a large accumulation of debt externally and domestically. For now, all eyes are on the upcoming tariff negotiations between China and the United States. If the two agree on a mutually acceptable tariff regime, there could be a relative, temporary equilibrium in the market, and the US economy would be safe until the November 2026 midterms congressional elections in the US. However, the US economic performance is in a bad shape. The debt trap for the American economy is alarming. Its collapse is damaging, and survival will threaten world peace and stability.
Fereydoun Barkeshli
Senior Energy Expert
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