How attack on Iran could impact global oil market and economy
A joint US-Israeli attack on OPEC member Iran risks a major oil supply disruption in the Middle East that, in a worst-case scenario, could trigger a global economic recession.
If Iran fourth largest oil producer Just over 3 million barrels per day in OPEC in January. The Islamic Republic shares a coastline with the Strait of Hormuz, the world’s most important waterway for global oil trade.
For a long time, the oil market ignored the risk of oil supply disruptions in the Middle East. Bob McNally, former White House energy adviser to former President George W. Bush, said traders underestimated the threat posed to the market by Iran’s retaliation for the US attack.
“This is the real deal,” said McNally, founder and president of Rapidan Energy. He said crude oil futures prices will likely rise $5 to $7 per barrel when trading opens at 6 p.m. ET on Sunday, as market prices remain at some risk.
On Friday, Brent crude oil prices rose $1.73, or 2.45%, to $72.48 per barrel, while U.S. West Texas Intermediate crude rose $1.81, or 2.78%, to close at $67.02 per barrel.
McNally said Iran may try to scare President Donald Trump by making the Strait of Hormuz unsafe for commercial traffic, which could push oil prices above $100 per barrel. He said the market did not appreciate that Tehran has large stockpiles of mines and short-range missiles that could seriously disrupt traffic in the waterway.
According to data from energy consultancy firm Kpler, more than 14 million barrels of oil flowed through the Bosphorus per day in 2025; This means one-third of the world’s total seaborne crude oil exports. About three-quarters of these barrels went to China, India, Japan and South Korea. China, the world’s second largest economy, provides half of its crude oil imports from the Bosphorus.
“A prolonged closure of the Strait of Hormuz is a guaranteed global recession,” said McNally.
Kpler oil analyst Matt Smith said more than 20 million barrels of crude oil were loaded into the Gulf today from Saudi Arabia, Iraq, the United Arab Emirates, Kuwait and Qatar for export. Smith said it was observed that some tankers gave up on passing through the strait.
McNally said that the spare oil capacity in the world comes from the Gulf countries and will not be able to pass through the strait in case of closure, which will effectively close the strait from the market. He said that approximately 20 percent of the world’s liquid natural gas exports flow through the strait, mostly from Qatar, and that it would not be possible to replace it.
“You’ll see Asian countries, especially those that are major oil and gas importers, hoarding when they realize that Hormuz is closed,” said McNally. “You see the mother of all bidding wars.”
The analyst said oil prices would need to rise high enough to balance the market, triggering an economic downturn that would reduce demand. “There is not enough discretionary or flexible demand for oil,” he said.
Only a small portion of the crude oil passing through the strait can be rerouted, McNally said. The Saudis have a pipeline running the country from the east to the west coast in the Red Sea. The UAE has a pipeline that crosses the Strait of Hormuz and ends in the Gulf of Oman.
Iran launched missile attacks on US bases in Qatar, Kuwait, the UAE and Bahrain, according to state media reports. Tom Kloza, director of oil and gas consultancy Kloza Advisors, said these attacks could affect traffic in the Strait of Hormuz.
“Iran’s attack on other neighbors in the Persian Gulf is changing the calculus, and the scale of the attacks is putting pressure on insurers to either aggressively raise tanker prices in the Strait of Hormuz or refrain from insuring any traffic,” Kloza said. he said.
ClearView Energy Partners Research Managing Director Kevin Book said the Trump administration could benefit from the Strategic Petroleum Reserve if oil prices rise. The reserve currently has a stock of approximately 415 million barrels. Ministry of Energy.
“But we’ll say it again: in supply crises, time matters. Scale matters, too,” Book said in a note to clients on Saturday. he said. “A full-blown Hormuz crisis could leave the balances maintained by the strategic stocks of the United States and members of the International Energy Agency (IEA).”
