Global Energy Security, Collateral Victim of Iran War

Since February 28, when the war by the United States and the Zionist Regime began in the hope of the collapse of Iran’s power and the sharp blade of the attack was turned toward the vital arteries of Iran’s energy, the world has witnessed not a military victory for the aggressors, but rather the collapse of the energy security order. This strategic miscalculation not only failed to bring Iran to its knees, but also plunged the global economy into an endless shock.

The main question that rises is “Did the architects of the attack have even the slightest understanding of energy capacity in the world?” The attack on Iran’s oil, gas, and petrochemical infrastructure - , which, according to international legal standards, is considered a crime against humanity - occurred while Iran, as the beating heart of the Middle East, is not just a producer, but the backbone of energy stability in the world.

The aggressors assumed that by bombing Iran’s energy facilities, they were targeting Iran’s energy security. However, immediately after the first explosions, the world realized that it was not Iran’s security, but global supply security that had been destroyed. The closure of the Strait of Hormuz - an inevitable consequence of the war - put the global market into a coma.

When the transit of essential commodities and oil came to a halt, prices in global markets did not face a gentle slope but a terrifying leap.

In addition to oil, the halt of Iran’s petrochemical product exports was a blow that disrupted the global supply chain.

Many have forgotten that petrochemical products are the foundation of modern manufacturing, from pharmaceuticals and fertilizers to packaging and food industries. Because of Iran’s exit from this market, food security alarms began ringing in many parts of the world. The warnings from the executive manager of the International Energy Agency (IEA) about the decline of strategic petroleum reserves were merely the tip of the iceberg that the invaders, through their imprudence, steered toward the global economy.

While markets were in chaos, the Ministry of Petroleum, in the shortest possible time, began managing the reconstruction of the damage inflicted upon Iran’s energy infrastructure, proving once again that Iran - by virtue of its indigenous knowledge and geopolitical position - is not easily eliminable from the energy market cycle. Today, a fragile ceasefire is in place between Iran and America. But the effects of this energy war persist in runaway inflation and ingrained fear in global markets.

The culprit behind this situation is clear: ignoring Iran’s strategic position, the US and the Zionist Regime, have held the world’s energy security hostage. They wanted to remove Iran from the equation, but inadvertently changed the equation in favor of proving Iran’s vital role. Today, more than ever, the world has realized that any military adventure against Iran directly translates into declaring war on the welfare and energy security of all the people of the world.

The Feb. 28 aggressors did not target Iran, but the global economy, and now the heavy burden of this instability rests on the shoulders of those very countries that remained silent in the face of this crime.

Energy Security Under Fire

Energy War Fallout; From Persian Gulf to World Markets

The Ramadan War and its subsequent developments were not merely a limited military confrontation in the region; they grew into one of the most significant turning points in the world’s energy equations. The attack on energy infrastructure, the threat to the security of the Strait of Hormuz, an unprecedented rise in concerns over the security of oil and gas supplies, and the reactions of major global actors all demonstrated just how vulnerable the global energy market is to geopolitical tensions. Amid this, important questions have arisen regarding the future of the global oil and gas market, the role of major powers, the position of emerging energy coalitions, the future of OPEC, the security of investment in oil and gas projects, and the economic and environmental consequences of this crisis for the world’s people.

In an interview with “Iran Petroleum”, Hojjatollah Ghanimifard, a prominent energy expert and former head of OPEC Petroleum Studies Department (PSD), analyses ongoing conditions from the perspective of regional developments, policies of Washington and its allies and Iran’s role in energy equations.

How do you assess the long-term consequences of the attack on energy infrastructure in the Middle East region, and what impact will this have on the structure of oil and gas trade in the world?

The long-term consequences of the recent attacks on energy infrastructure, particularly in the Persian Gulf countries, will include increased investment costs in the oil and gas industries, as well as related industries such as petrochemicals. Although oil and gas markets have previously experienced instances of such attacks - both from a political and military perspective - the recent events have been far more extensive in scope. Earlier military attacks by NATO with the US support against Libya, followed by sanctions and intense political pressure on the oil and gas industries of Venezuela, Iran, and later Russia, were all instances of this trend. The common outcome of all these developments has been the shift of attention and power in the global energy market toward the US oil and gas industries, to the extent that today, with production exceeding 13.5 mb/d, the United States is the world’s largest oil producer. Following that, Russia holds second place with approximately 10 mb/d, while Saudi Arabia stands in third place with just over 9.5 mb/d. This shift in balance has not been limited to the oil sector. In the gas sector as well, the US, producing over one billion cubic meters per day, has become the world’s largest gas producer, with Russia and Iran in subsequent positions. Moreover, political pressures and sanctions on Russian gas, along with the policies pursued by the US in Europe, have made the US the largest exporter of LNG to European countries, whereas previously Qatar held that position. It should be also noted that the passage of approximately 20% of the world’s oil through the Strait of Hormuz has doubled the significance of this strategic waterway. The closure of the Strait of Hormuz following the US and Zionist Regime military attacks against Iran could disrupt the global oil market balance far more quickly than other crises. For this reason, many analysts believe this crisis is the most severe crisis the global oil market has ever confronted.

The formation of new energy coalitions, including a coalition of Iran, Russia, and China against the West and outside of American influence, is highly likely in light of the recent war; how do you assess the formation of such coalitions?

The cooperation between Iran, Russia, and China is not a product of the recent hostilities by the US and Zionist Regime. In fact, the unconventional positions of the US and some European countries against Iran over the past several decades have made the formation and strengthening of such a coalition inevitable. It is natural that as long as these confrontations and hostilities continue, this cooperation will also persist, and it may even be joined by new countries. Regarding the significance of this coalition among Iran, Russia, and China, it should be noted that this cooperation - which has now been forming for several decades - encompasses a group of key players in the global energy market. Russia, as the world’s second-largest oil producer; China, as the world’s second-largest oil consumer and also the largest importer of crude oil; and Iran, which before the imposition of unfair sanctions was the world’s fourth-largest oil producer - each plays a decisive role in energy equations. Therefore, if we

consider the combined position of these countries in energy production, consumption, and trade, this coalition - not only in the current situation but also in the future - will hold an important and influential position in the global energy market, particularly in the areas of oil, gas, and related products.

Do you think the closure of the Strait of Hormuz and the attacks on energy infrastructure threatened the hegemony of the US over the energy market, which had been established over the past few decades?

America’s quest for supremacy and domination over the global oil and gas market was not only not strengthened by the US and Zionist Regime attacks against Iran, but also faced severe challenges. The main reason for this is the ineffectiveness of the goals they sought to achieve, particularly after Iran’s action in closing the Strait of Hormuz. In other words, the closure of the Strait of Hormuz demonstrated that even the illegal US naval blockade failed to achieve Washington’s intended objectives. The US President openly mentioned the seizure of some Iranian oil tankers - an action that, in the view of many, closely resembles the behavior of pirates. It seems that the closure of the Strait of Hormuz has dealt the strongest blow to America’s policy of supremacy and domination over the global energy market, especially in the segment of energy trade that is transported from the Persian Gulf region to other parts of the world. Among the most important signs of this are the oil, gas price hikes, and petrochemical products. Additionally, rising costs of maritime, air, and land transportation have been other consequences of the crisis. The sum of these developments is a clear indication of the ineffectiveness of America’s hegemonic policies, whether at the outset of the Ramadan War or afterward in the form of the illegal naval blockade against Iran.

Strategic petroleum reserves (SPR) have been gradually released since the beginning of the Ramadan War in response to the global rise in oil prices; has this reduction occurred in response to the insecurity created in the Middle East region?

The release of part of the strategic oil reserves by member countries of the International Energy Agency (IEA) occurred in response to the rise in crude oil prices following the Ramadan War and the US and Zionist Regime attacks against Iran. The extent to which the geography of energy insecurity remains limited to the Persian Gulf and the Middle East depends largely on the subsequent actions of the US and Zionist Regime - specifically, which other energy-producing regions of the world they will use to support potential future attacks against Iran. Consequently, other oil and gas producing countries must also strive to protect themselves against financial inducements or political pressures from the US and Zionist Regime, so that the scope of this energy insecurity does not spread to their regions, as well.

How can the intensification in energy market insecurity affect the global fuel mix and its environmental consequences?

If energy insecurity in the Persian Gulf region persists over the long term, energy security will certainly be compromised for all consumers around the world, and the longer these conditions continue, the more severe the dimensions of this insecurity will become. When insecurity in the energy market increases, all countries - albeit with varying degrees of intensity - face extensive economic and environmental damage. For instance, reverting to greater use of coal for electricity generation, or using wood for heating and cooking in less developed countries, are among the consequences that bring harmful environmental effects, along with causing significant economic damage.

Does the decline of direct US influence over Middle Eastern energy flows mean an increase in market instability, or the emergence of new balance-of-power mechanisms?

It does not seem that the decline of direct US influence over the energy flow produced in the Persian Gulf region will happen quickly; because replacing the oil and gas production of this region with that of other oil-rich areas of the world is not easily or quickly achievable in the short term. Of course, rising oil and gas prices could increase investment in countries that possess vast energy reserves - including Venezuela, which holds the largest oil reserves in the world, or some other countries in Latin America, and even the US itself. These conditions could make investment in such countries more profitable, but realizing this potential will take time and will not be achievable quickly.

In a multipolar environment, how will OPEC’s role change? Can this Organization transform from a supply management body into a more active geopolitical player?

It does not seem that OPEC’s decisions are influenced solely by temporary changes in oil production in the Persian Gulf countries. I mean, OPEC has shown over the past several decades that even during periods when some of its members had direct and open disputes with one another, it has tried to act primarily as an economic lever, not a political tool. OPEC has always attempted not to become involved in political games among its members or political behaviors in the international arena, and in the rare cases where it has exceptionally engaged in such matters, that involvement has been very limited. Even the recent exit of the United Arab Emirates (UEA) from some OPEC-related mechanisms could be analyzed within this same framework - which the Organization wishes to maintain its economic role rather than using

its position as a tool of political pressure. OPEC’s main goal is to balance the market from a supply perspective, in such a way that prices neither drop so low that producers face losses nor rise so high that consumer countries and ordinary people suffer severe and irreparable damage. In fact, OPEC has always tried to create a balance that is acceptable to both suppliers and consumers.

Should the direct attack on a key energy player and the threat to the Strait of Hormuz be considered a temporary market shock or a turning point in the risk structure of the global energy system?

The attack on Iran, followed by Iran’s use of a right it had not exercised until then regarding the Strait of Hormuz, as well as the consequences this action had for the world, indicated that this period could be considered a turning point in the assessment of direct risks related to energy security in the world.

If attacks on energy infrastructure become a legitimate geopolitical tool, what impact will that have on long-term investment in oil, gas, and LNG projects?

Attacking a country’s energy infrastructure is considered an unacceptable act under established international agreements and norms and in many cases is evaluated within the framework of war crimes. The continuation of such attacks - whether by the US and Zionist Regime or by some regional actors, including the UAE which, according to some reports, carried out an attack on Iran’s Lavan Refinery one day after the ceasefire announcement - will undoubtedly affect the investment process in the oil and gas industry, especially LNG projects in the Persian Gulf region. It is natural that an increased level of insecurity raises project implementation costs, and investors will demand higher returns and greater guarantees for the return of their capital. This situation will ultimately benefit major oil and gas companies, as well as banks and financial institutions providing capital, but the main cost will be borne by end-users around the world.

Given the rising production costs in the upstream oil and gas sector, what impact will this trend have on the final price of energy and related products worldwide, and what will be its consequence for the global economy?

When production costs rise in the upstream sector of the oil and gas industry, the final price of products will also rise - from oil and gas to petrochemical products and other related industries. As a result, ordinary people in different countries will be forced to pay a higher price for the consequences of warmongering and tension-creation by countries that claim to be advocates of democracy. The continuation of this trend could also constrain global economic growth, and if irrational behaviors intensify and military attacks continue, it could even lead to economic recession on a global scale. The first signs of such a recession would be widespread unemployment in various countries and increased economic pressure on ordinary families - those that face rising prices as consumers, while also suffering direct economic damage in the production and employment sectors.

Chain Broken; Hormuz Closure Impacts on Global Economy

Background

The US-Zionist Regime military aggression against Iran has turned the Persian Gulf region into the epicenter of an unprecedented crisis in global energy security. Following the closure of the Strait of Hormuz due to the resulting insecurity, the world economy has, for the first time, encountered a disruption unlike any it has ever experienced before.

Contrary to initial assessments that presumed the crisis would be “short-term” and “manageable,” the Strait of Hormuz remains in a state of “complete paralysis” due to the continuation of America’s belligerent policies. The present article is to analyze, while revisiting the geopolitical dimensions of the crisis, its profound impacts on the energy economy, global supply chains, and the strategic options available to policymakers, drawing on historical data and up-to-date analysis.

Quantitative Aspects

The closure of the Strait of Hormuz has removed approximately 20 mb/d of crude oil and petroleum products from the global market. This figure represents roughly 20% of total world oil consumption in 2025. The International Energy Agency (IEA) has described this crisis as “more severe than the 1973, 1979, and 2022 crises combined”.

During the 1973 oil crisis, the Arab oil embargo against supporters of the Zionist Regime removed only 4.5 mb/d (about 7% of global supply), whereas the current crisis has targeted 20 mb/d.

Brent prices, immediately after the outbreak of war, surged 58% from pre-war levels, rising from around $66 to over $103 per barrel. Estimates suggest that if the blockage continues, prices could exceed $120 per barrel and, in severe scenarios, reach $140 or higher.

The LNG market has also been severely impacted. Qatar, the world’s largest LNG exporter, ships all of its exports (approximately 9.3 bcf/d) through the Strait, and there is no practical alternative route for this massive volume. If the blockage persists for more than six months, the global LNG market will face a “severe imbalance in supply to all importers,” and global LNG trade will decline relative to baseline scenarios.

Another critical consequence of the Strait of Hormuz closure concerns the petrochemical market. Approximately $20-25 billion worth of petrochemical products pass through this route annually, with noticeable global impacts on the prices of plastics, auto parts, and toys.

Alternatives and Structural Restrictions

In response to the closure of the Strait of Hormuz, there are three alternative pipeline routes in the region:

First, Saudi Arabia’s East-West Pipeline (Petroline) with a nominal capacity of 5 mb/d, which was temporarily increased to 7 mb/d in 2019.

Second, the UAE’s Habshan-Fujairah pipeline with a capacity of 1.5 mb/d, connecting the country’s exports to the Fujairah terminal on the Gulf of Oman.

Third, Iran’s Goreh-Jask pipeline with an initial capacity of 300,000 b/d.

However, these options face three fundamental challenges:

1- Insufficient capacity: Even if all pipelines bypassing the Strait of Hormuz operated at maximum capacity, at best less than 20% of the oil flow through this strategic chokepoint could be replaced. In other words, of approximately 20 mb/d, only about 3.5 mb/d could be transported via alternative routes.

2- Security vulnerability: These pipelines and associated facilities are well-known and easy targets for counterattacks. During ongoing conflicts, Saudi Arabia’s Ras Tanura terminal (the world’s largest oil export terminal, with a capacity of 550,000 b/d) has been attacked. Saudi Arabia’s East-West pipeline has been targeted by Iranian missiles, and the Fujairah terminal has faced drone attacks. Even a pipeline located entirely within a single country’s territory is not immune to cyber and drone attacks.

3- No alternative for LNG: A less-discussed issue is the absence of any pipeline alternative for LNG. Unlike crude oil, which can (at least theoretically) be transported via overland pipelines, LNG requires massive liquefaction facilities, transport via specialized vessels, and regasification facilities at the destination. No existing or under-construction international pipeline may replace even a fraction of the vast LNG volume transiting through Strait of Hormuz.

Chain of Economic Fallout

The consequences of the Strait of Hormuz closure have rapidly spread beyond energy markets, impacting the entire global economy. The three main channels of shock transmission are:

1- Rising transportation and insurance costs: The closure of the Strait of Hormuz and the ongoing threat to commercial vessels have dramatically

increased maritime insurance premiums. Shipping companies are either forced to pay exorbitant premiums or are essentially unable to obtain insurance coverage for transiting the region. This directly increases the final cost of imported and exported goods.

2- Fertilizer shortages and threats to food security: Approximately one-third of global chemical fertilizer trade passes through the Persian Gulf and the Strait of Hormuz. Disruption to this route, combined with rising energy prices (energy itself being a key input for nitrogen fertilizer production), has delivered a double shock to global agriculture. For developing countries already facing budget deficits and heavy debt burdens, increased costs of food and fertilizer imports could lead to a full-blown humanitarian crisis.

3- Inflation and pressure on household budgets: As oil and gas prices rise, not only does vehicle fuel become more expensive, but electricity costs, household heating, and—most importantly—the overall cost of basic goods also increase. The IEA has warned that developing countries, due to their limited fiscal space and restricted access to international financial resources, are the most vulnerable group in facing this price shock.

Comparison with Past Crises

To understand the unprecedented scale of the current crisis, it is useful to compare it with three other historical shocks:

1- The 1973 shock (Arab oil embargo): It resulted in a reduction of approximately 5 mb/d, and oil prices rose from $3 to $12. At that time, the lack of supplier and customer diversity, coupled with unfamiliarity with crisis management, made the situation difficult.

2- The 1979 shock (Islamic Revolution): It caused a fluctuating reduction of 6 mb/d, and prices climbed from $15 to $40. However, OPEC and Saudi Arabia were able to create a partial substitution.

3- The 2020 shock (COVID-19): This was a demand shock that drove oil prices down to zero.

The 2026 Strait of Hormuz closure crisis is different: it is a supply-driven and logistics-driven shock that simultaneously targets oil, LNG, and petrochemicals. In 1973, global strategic reserves were very minimal, but today, despite the existence of 4 billion barrels in storage, it is still insufficient because the LNG, petrochemical, and maritime transport chains are this time disrupted, and global price formation has a structure that is far more flexible yet more fragile than in the past.

Overall, the current crisis differs in three aspects:

1- Magnitude of the shock: 20 mb/d is removed, compared to 4.5 mb/d in 1973 and 6 million barrels in 1979.

2- Supply chain complexity: Unlike the 1970s, global supply chains today are far more interconnected and fragile, such that disruption at one chokepoint may create extensive domino effects.

3- Concurrency with other crises: This crisis has occurred while the global economy was still recovering from the COVID-19 pandemic, the Russia-Ukraine war, and chronic inflation.

According to the IEA Executive Director Fatih Birol, the current crisis is “larger than the 1973, 1979, and 2022 crises combined.”

Conclusion

The closure of the Strait of Hormuz following the US-Zionist Regime military aggression against Iran has produced one of the deepest and most extensive energy supply shocks in modern history. Analysis of data from credible international institutions shows that the dimensions of this crisis are unprecedented—not only in terms of the volume of supply disruption (20 mb/d) but also in the diversity of affected commodities (oil, LNG, fertilizers) and the geographic scope of its consequences.

Although alternative pipeline routes with limited capacity (at most 3.5 mb/d) exist, they are unable to compensate for the shock for several reasons, including insufficient capacity, security vulnerability to counterattacks, and—most importantly—the absence of any practical alternative for LNG trade. This situation has starkly exposed the fragile nature of the world’s economic dependence on vulnerable maritime chokepoints.

Beyond energy markets, this crisis has intensified global inflation by raising transportation costs, insurance premiums, and fertilizer prices, confronting various countries with challenges related to financing, foodstuff security, and pressure on household budgets. As observed during the COVID-19 pandemic and the onset of the Ukraine war, energy and transport shocks rapidly propagate through all sectors of the economy and may erase years of development gains.

World Economy Reaction to Energy Shocks

Ehsan Jenabi

Introduction

Energy is the fundamental driver of the global economy, powering the production, transportation, and distribution of almost all goods and services. Reliable and affordable energy directly fuels world economic growth by enabling industrial expansion, technological innovation, and enhanced productivity across sectors. On the other hand, energy price shocks or supply disruptions may trigger inflation, reduce output, and slow growth, highlighting energy’s dual role as both an engine and a potential bottleneck for global prosperity.

The global economy is currently crossing one of the most severe and complex energy shocks in decades, the consequences of which extend far beyond simple price spikes at the petrol stations all over the world. Since the convergence of post-pandemic demand surges, supply chain bottlenecks, and major geopolitical conflicts, energy markets have been thrust into a state of heightened uncertainty, volatility and structural realignment. This upheaval has acted as a powerful accelerant for global inflation, disproportionately threatened the stability of emerging economies, and forced a dramatic repricing of risk across financial and commodity exchanges.

The present article aims at looking into the interconnected dimensions in turn: first, how rising energy costs have fueled worldwide inflationary pressures; second, the acute vulnerabilities facing developing nations; third, the reactive dynamics within financial and energy trading markets; and finally, a synthesis of these issues to assess the broader outlook for the world economy.

Current Status

Following the shocks of the early 2020s, global energy markets have stabilized but remain hypersensitive to geopolitical ruptures, with crude oil prices hovering around $ 80–90 per barrel, due to ongoing production discipline by OPEC+, and recurring supply fears from the Middle East and Russia-Ukraine fronts.  For instance, natural gas supplies in Europe are secured but costly, relying heavily on liquefied natural gas from the US and Qatar, while China and India aggressively lock in long-term fossil fuel contracts even as they lead the world in renewable installations. The rapid expansion of  renewables :solar, wind, and battery storage, coupled with massive green subsidies in the US, EU, and Japan, is finally beginning to dampen overall energy price volatility, yet the transition’s upfront costs and critical mineral bottlenecks—especially for lithium, copper, and rare earths—are generating new inflationary pressures.

Now, global energy markets are drastically under influence of the illegal war of US and Zionist Regime against Iran initiated on 28 February 2026. Disregarding the importance of global energy security across the world, despite pretending to be advocate of sustaining global energy security to ensure materialization of reasonable economic growth; US and Zionist Regime war against Iran has led to a significant energy crisis. In response to the US unilateralism, attacking many civil sites and martyring our fellow compatriots, Iran has given warning to the neighboring countries, which host US military bases used for air strikes against us, and eventually Iran closed the Strait of Hormuz. Blocking the Strait of Hormuz has disrupted exports of around 20% of the global oil and LNG supply. As a result, consumers receiving energy from the Persian Gulf region have faced severe energy shortages, as well as petrochemicals and fertilizers. In addition, those countries receiving Urea, Helium, Aluminum and petrochemicals from the Persian Gulf suppliers faced severe shortages, which are the outcome of the unilateralism of US, and disregarding

the prosperity of all countries in the world, even US allies.

Overall Assessment

The current $ 80–85 oil range is said to be above the long-term comfort zone for most industrial economies, meaning core inflation is unlikely to fall to central bank targets (2%) without inducing a recession. Undoubtedly, closing the Strait of Hormuz by Iranian navy forces has had significant impact on many issues, particularly supply of fertilizers, which may lead to shortage of agricultural products and crops. This is something not taken into consideration prior to attacking Iran amid negotiations held to resolve the dispute.  It is noteworthy that unlike past cycles where wars ended and supply normalized, the market now prices in a permanent risk premium due to the war in Ukraine, and the US and Zionist Regime war against Iran. Consequently, energy security is now prioritized over pure economic efficiency.

Energy Price Hike

The surge in global energy prices has been the single most powerful driver of the recent inflationary wave, acting as both a direct catalyst and an indirect amplifier across almost every sector of the world economy. Directly, higher oil, natural gas, and coal prices immediately raise the cost of gasoline, heating, and electricity for households, while forcing industries—from transportation and manufacturing to agriculture and chemicals—to pay more for production inputs, which swiftly passes through to consumer goods. Indirectly, energy inflation triggers powerful second-round effects: workers demand higher wages to maintain living standards, pushing up labor costs, while businesses raise prices proactively to cover expected future energy expenses, embedding inflationary expectations into the economic system. Moreover, because energy is a fundamental input to nearly all goods and services—fertilizers for food, plastics for packaging, fuel for shipping, and power for data centers—a sustained energy price hike creates cascading price pressures that ripple through global supply chains, hitting food staples, housing materials, and electronics alike.

Emerging Economies

Emerging economies face a disproportionate and systemic vulnerability to energy price shocks and global inflation, rooted in structural weaknesses that magnify even modest external pressures. Unlike developed nations, which possess deeper financial buffers, reserve currency status, and more diversified energy mixes, most emerging markets are net importers of oil and gas, forcing them to spend a far larger share of their foreign exchange reserves on energy imports—draining funds needed for debt servicing, infrastructure, and social programs. At the time global energy prices spike, the economies experience immediate current account deterioration, currency depreciation, and become crushing when their currencies collapse.

Financial and energy exchange markets have reacted to the ongoing energy shock, emanated from the US and Zionist Regime war against Iran, with a stark divergence between short-term panic trading and long-term structural repositioning, revealing deep uncertainty about the durability of the current price environment. In energy futures markets, crude oil and natural gas contracts have exhibited extreme backwardation—where near-term prices trade significantly above current prices—signaling acute immediate supply scarcity while markets simultaneously price in expectations of demand destruction or recession-driven cooling in upcoming months, creating violent intraday swings that have triggered multiple margin calls and broker defaults among undercapitalized trading houses. Meanwhile, financial equity markets have rotated aggressively: fossil fuel and defense sectors have seen outsized gains as investors hedge against geopolitical risk, while airline, logistics, and chemical stocks have been heavily sold off on margin compression fears. Commodity exchanges have responded by raising margin requirements and shortening trading hours to manage unprecedented volatility, while exchange-traded funds tracking energy indices have experienced record outflows from retail investors even as hedge funds build concentrated long positions. Perhaps the most significant market reaction has been the decoupling of traditional hedges: the long-standing negative correlation between oil prices and the US dollar has broken down, with both rising simultaneously, and gold—typically an inflation hedge—has failed to outperform energy assets, forcing institutional investors to refurbish their portfolio risk models.

Conclusion

In conclusion, the current energy shock, which is the direct result of authoritarian policies of the US has fundamentally changed the global economic landscape, revealing deep interconnections between energy prices, inflation, financial markets, and  of course the vulnerability of emerging economies. In other words, what began as a supply-driven price surge has cascaded into persistent inflationary pressures, unevenly distributed across nations, while financial and energy exchanges have responded with volatile trading patterns, broken correlations, and a decisive shift toward hedging structural scarcity rather than cyclical dips.

In this situation, emerging economies have appeared as the most exposed front, trapped between expensive energy imports, depreciating currencies, and limited fiscal buffers, underscoring a widening gap between the developed and developing nations.

Having a glance at the current situation, it could be argued that the world economy is not facing a temporary energy spike but a prolonged period of elevated prices and systemic fragility, where traditional monetary and market mechanisms struggle to cope. The path forward will require not just coordinated policy responses and accelerated energy transitions, but a hard reckoning with the fact that energy is no longer a cheap, stable commodity—it has become the central axis of global economic risk.

Last but not the least, undoubtedly the US unilateral and brutal actions and disregarding the pivotal issue of “global energy security”, has so far damaged the world economy, particularly the emerging economies. In this regard, the global community is expected to reach a consensus to properly deal with this issue severely to prevent further damages and materialization of the US evil intentions.

US-Iran War; Hard Geopolitics Back to Energy Markets

Shuaib Bahman

Intl. Affairs Analyst

Background

The military aggression of the United States and Zionist Regime against Iran on 28February 2026 has shocked global energy markets with an intensity unprecedented in modern history. The closure of the Strait of Hormuz, followed by attacks on energy facilities in the region, has posed a structural challenge to the decades-old order of global energy supply.

As a result, new discussions have emerged about how a regional military conflict may transform into systemic risk in the energy market. In this context, the response of OPEC, the International Energy Agency (IEA), and consumer countries to the ongoing crisis, as well as the role of naval fleets in ensuring the security of energy shipping routes, has become critically important. These developments raise a fundamental question: has the world entered a new era of energy wars? The answer to this question suggests that the return of hard geopolitics to energy markets—which for a decade was thought to have been marginalized by the impact of the US shale revolution—has now become an undeniable reality.

Systematic Risk to Energy Market

The Strait of Hormuz, one of the world’s most vital waterways, directly affects approximately 20% of global maritime trade in crude oil and petroleum products, as well as about 20% to 25% of global LNG trade. What makes the Strait of Hormuz a systematic vulnerability is the lack of a practical alternative route for the immense volume of oil that passes through it.

The closure of the Strait of Hormuz does not only impact oil. Natural gas prices have risen by 54% in Asia and 63% in Europe compared to the week before the start of military operations. Europe, which had been trying to recover from the Russian gas shock caused by the Ukraine war, now faces a severe shortage of gas and diesel, as previous sanctions against Russia have severely limited its alternative options. The reduction in LNG traffic from Qatar through the Strait of Hormuz, coupled with attacks on energy facilities in the region, has also caused a multi-year disruption to Asia’s gas supply chain.

Meanwhile, the oil price response to the military conflict has been immediate and sharp. The international Brent benchmark jumped 8 percent over the two trading days before and after the start of operations, rising from $71.32 on February 27 to $77.24 on March 2. As the conflict continued, prices moved much higher and briefly crossed the $100 threshold. The Italian Institute of International Affairs (IAI) reports that at the beginning of the second week of the conflict, oil prices opened at peaks of $117 to $120, indicating a “war premium” of $30 to $40 per barrel.

The impact of the energy shock on the global economy has been rapidly transmitted through the inflation channel. The US Bureau of Labor Statistics reported that the energy price index in March 2026 increased by 10.9 percent year-on-year. The gasoline sub-index jumped 21.2 percent. It is projected that if the closure of the Strait of Hormuz extends beyond eight weeks, the national average will experience approximately $5 per gallon.

The IEA stated in its April 2026 report that global oil demand growth for 2026 has been erased, with consumption this year expected to fall by 80,000 b/d compared to last year. This would be the first annual decline in demand since the COVID-19 pandemic. Demand had been expected to grow by 730,000 b/d.

OPEC Reaction

OPEC is now in a very difficult position. Member countries of the [Persian] Gulf Cooperation Council (including Saudi Arabia, the UAE, Kuwait, and Iraq) have been forced to reduce production due to insecurity in the Strait of Hormuz. Reports indicate that Saudi Arabia, Iraq, the UAE, and Kuwait have collectively cut production by 6.7 mb/d. On March 3, Iraq officially announced a production cut of 1.5 mb/d, and a few days later, Kuwait followed suit.

In an OPEC statement on April 5, the Organization warned about the restoration of damaged energy facilities in the region, describing it as “costly and time-consuming.” Aramco explicitly warned of a market “catastrophe” if the Strait of Hormuz is not reopened. On May 4, OPEC+ announced in a statement that seven member countries would  collectively increase their production quotas by 188,000 b/d in June. However, this increase has been described as “largely symbolic” and a “business-as-usual approach,” as most of it will remain on paper as long as the Strait of Hormuz remains closed. This reality shows that OPEC has very limited room to maneuver in the face of a full-blown geopolitical crisis.

The IEA’s initial stance in the early days of the war was cautious. Executive Director Fatih Birol stated on 6 March 2026, that there were no plans for a collective release of oil reserves. However, as the

crisis escalated and oil prices crossed the $100 threshold, the IEA announced on March 11 that it would release 400 million barrels of oil from member countries’ strategic reserves—the largest such action in the agency’s history. Nevertheless, against a 9 mb/d supply reduction, the release of 400 million barrels provides only a few weeks of price relief, not months; which is why Birol described the conflict in late April as “the greatest global energy security challenge in history.”

Notably, the global energy system is no longer symmetrical. Europe remains the most vulnerable player: its energy import dependency is still above 50%, and alternatives have been limited due to sanctions imposed on Russia. European gas prices have surged by 75%, and diesel shortages—due to reliance on the region’s refined products—pose a serious threat. China, however, is in a much stronger position: it has accumulated vast strategic oil reserves over the years and diversified its energy base. Moreover, Beijing continues to benefit from access to discounted Russian and Iranian oil, insulating parts of its economy from global price increases.

Military Fleets Role in Shipping

According to assessments by US intelligence agencies, Iran has the capability to disrupt commercial shipping through mine-laying, fast-attack boats, submarines, shore-based cruise missiles, aircraft, and other systems. Consequently, by virtue of its military power, Iran exercises direct control over the Strait of Hormuz. Iran has also offered safe passage to some vessels through routes closer to its coastline.

On the other hand, Donald Trump announced in early March that the US Navy would escort tankers through the Strait of Hormuz if necessary, but the United States was never able to fulfill this promise—especially given that, Iran repeatedly warned the US Navy not to enter the Strait. Meanwhile, European countries have refused to participate in US plans to clear the Strait of Hormuz. This demonstrates that even powerful military fleets lack the capability to reopen the Strait, and Iran, relying on its asymmetric power and leveraging geographical advantages, continues to hold the upper hand in the Persian Gulf.

New Era of Energy Wars

The return of hard geopolitics to the energy market is one of the most significant conceptual consequences of the Iran-US war. For nearly a decade, analysts believed that the US shale revolution and America’s transformation into the world’s largest oil producer had eliminated traditional oil “deterrence” and reduced Western dependence on the Middle East. However, the closure of the Strait of Hormuz has shown this analysis to be incomplete. In fact, even though the United States is not a direct consumer of Persian Gulf energy, it targets the global economy—of which the US is an inseparable part.

In this regard, three key signs indicate the entry into a new era of energy wars:

First, the revelation of systemic vulnerability in critical chokepoints, despite the US shale revolution: The Strait of Hormuz—21 miles wide and through which 27% of the world’s oil passes—has shown that domestic production cannot provide complete protection against disruptions to global supply chains.

Second, a transformation in the concept of “hard power” in energy policy: The key to energy security is no longer just “exporting more oil,” rather it is “maintaining military power over transit routes.” Military fleets—and specifically the ability to escort tankers, clear mines, and impose blockades—have returned to a central role after two decades during which proxy warfare had kept them in the shadows.

Third, a shift from geoeconomics to hard geopolitics: As the world returns to geoeconomic constraints, the use of military force has once again come to dominate global affairs, relegating economic considerations to a secondary status. The war in Ukraine and now the US war against Iran, reveal a recurring pattern: wherever key energy chokepoints come under military disruption, the world’s economic and political calculations are rewritten.

These events demonstrate that the “era of energy wars”—which was thought to have ended with the conclusion of the Cold War; and the expansion of international regulatory institutions—has not only returned, but is being consolidated with new characteristics, including the simultaneous multiplicity of conflict zones, the complexity of alternative supply chains, and the speed at which price shocks are transmitted to end consumers.

Conclusion

The return of hard geopolitics to the energy market following the US war against Iran is an undeniable reality. A supply disruption of 9 mb/d—the largest shock in energy history—has shattered traditional frameworks of energy security analysis. The responses of international institutions, such as the 400-million-barrel release by the IEA and OPEC’s 188,000 b/d quota increase, while unprecedented, have remained insufficient given the scale of the crisis.

The enduring reality in the current situation is that the “Iran-US war” is not merely a military event, but rather a symbol of the “return of hard geopolitics” to the heart of the global political economy—a return that will impact energy markets and the international system for years to come.

Iran Petchem Strikes Threaten Global Food Security

In the wake of the US-Zionist Regime strikes on Iran’s petrochemical industry infrastructure and ensuing disruption of Iran’s petrochemical exports, one of the world’s most important sources of methanol and urea supply has faced a supply disruption.

Prior to the 40-day Ramadan War, Iran had a production capacity of 16 mt/yr of methanol and 10 mt/yr of urea. Now that the industry’s infrastructure has been damaged, the global petrochemical trading market has been deprived of Iranian products supply - an event that has not only upset the balance of the chemical raw materials market but has also revealed signs of a structural shock in the global supply chain from Asia to Europe. From rising fertilizer prices and concerns over food security to soaring costs of plastic raw materials and downstream industries, the global market is now facing the consequences of the removal of one of the Middle East’s key players.

Mohsen Ansari, an analyst, says targeting Iran’s petrochemical infrastructure is one of the most serious recent shocks to the global market. In an interview with “Iran Petroleum”, he said disruption of Iran’s petrochemical exports, food security in the region and the world has been jeopardized, and we are witnessing the beginning of a disruption in a widespread industrial chain, with various sectors of the economy set to be affected by this shock.

The following is the full text of the interview with Ansari:

Iran is one of the main suppliers of methanol and urea in the global market. Can disruptions in exporting these products be considered one of the most severe shocks to the supply chain of chemical raw materials in recent years?

Sure. The Middle East’s contribution to global methanol supply is around 18 to 20 mt/yr, which is now facing disruption. This figure represents half of the methanol circulating in the global market. We must also consider that Iran and Saudi Arabia, with a combined production of around 14 mt/yr, are the largest producers and exporters of methanol in the Middle East. Therefore, it is natural that disruptions in Iran’s methanol exports will also cause severe problems for other countries in the Persian Gulf region, and this disruption will ultimately be transmitted to the global consumer chain, especially Europe and Asian countries. We are facing a similar situation regarding the production and export of urea. The Middle East’s share of global urea supply is 20 mt/yr, of which Iran holds a significant portion. We need to bear in mind that the figure of 20 mt represents a major part of global urea trade. In other words, disruptions in exports from Iran and other producing countries would deliver a very large shock to the global fertilizer market. The rise in global urea prices confirms this, as we are witnessing growing global concerns in this regard. Of course, it is noteworthy that this has also happened with other chemical feedstock, which will exacerbate these shortages. In any case, this event represents one of the most severe shocks to the global market in recent years.

To what extent is China, the world’s largest consumer of methanol, dependent on Iranian supply, and could a disruption in this flow fundamentally upset the balance of the Asian methanol market?

Based on information published in past years, the average methanol consumption of China ranges between 50 and 60 mt/yr, of which about 15 mt—approximately 25%—is imported. This means China is not entirely dependent on methanol imports; with its vast coal reserves, it can supply most of its domestic methanol needs. However, imports still account for a significant portion of supply and naturally influence the price of this commodity. According to statistics, Iran is the largest source of China’s imported methanol. Various figures have been reported, ranging from 25% to 50% for Iran’s share. This indicates that Iran holds a highly important and influential position in this sector, and any disruption in the supply of Iranian methanol could easily upset the balance of China’s methanol industry. This issue could even create tensions in Asian markets—not only because China is the world’s largest consumer, but also because it is the largest marginal buyer in the imported methanol market. When the dominant source of its imports is disrupted, the impact does not stay confined to China’s ports; it will be felt in Asian pricing, alternative supply flows, discharge scheduling, and even the economics of derivatives across the entire region. This supply reduction leads to other chain reactions, including higher feedstock prices, lower production output, reduced profit margins, and in some cases, even production shutdowns. According to numerous global reports, methanol prices have risen sharply in many markets. This price increase, combined with reduced feedstock input, translates into serious damage to methanol-consuming value chains, including resins and olefins. For instance, producers of acetic acid, methanol-to-olefins (MTO), formaldehyde, and others are forced to raise the prices of their finished products under these conditions, leading to general inflation and imposing severe constraints on downstream industries. Therefore, in practice, restrictions on Iranian methanol are not just an issue of a single commodity; they mark the beginning of a disruption across a broad industrial chain, with various sectors affected by this shock.

In the fertilizer market, what impact has the removal of a portion of Iran’s urea had on food security and agricultural production costs in countries such as India and Southeast Asia?

The direct impact of this shock are price increases, restricted access, and reduced inventories. For instance, Reuters reported that Indian companies in a major tender covering about 25% of their annual urea imports were forced to pay prices double those of two months earlier- a very sharp price increase over a short period. Meanwhile, other sources indicate that since the crisis began, at least 2 mt of urea production have been lost, and nearly 1 mt of cargo have been stuck in the Persian Gulf. According to global food organizations, the strain caused by nitrogen fertilizer shortages is spreading rapidly. If this situation continues, emerging economies will face difficulties regarding food security and securing necessary agricultural fertilizers. Therefore, the removal of part of Iran’s urea supply is not just a pricing issue; it could deal a blow to regional and global food security.

Some analysts maintain that disruption in Iran’s petrochemical exports could result in an increase in the price of many industrial raw materials at the global level. Can this trigger a new wave of inflation in downstream industries?

The precise answer to this question is that although the price increase will moderate during this period, at a structural level, it signals the entry into a phase

of higher risk and greater instability. If regional tensions subside, part of the price increases, freight and insurance costs, and the shortage caused by the fear of war will disappear. However, even in this scenario, even optimistically, the market will not immediately return to its previous equilibrium, because inventories, contracts, insurance, shipping schedules, and buyers confidence have all been damaged. Recently, the CEO of Aramco also referred to this point in an interview, emphasizing that even after tensions subside and the Strait of Hormuz is reopened, the global energy market’s shortages and their effects will not simply vanish. Macroeconomic data also point to the same conclusion. Given the interconnected effects of shortages of petrochemical feedstock -from methanol to liquefied petroleum gas and naphtha-across all supply chains, it is more accurate to say that the petrochemical industry has entered a new regime of heightened geopolitical risk, rather than merely dealing with a temporary price spike.

Should the rise in feed prices in the plastic and chemical industries be considered a temporary market reaction, or a sign that the global petrochemical industry is entering a new era of supply instability?

Price increases are already being observed across various regions and products. The rising prices in the petrochemical value chain - such as polystyrene, PET, and even polyethylene - have been reported by major international news agencies. According to these reports, disruptions in the Persian Gulf have caused a surge in plastic and polymer prices, prompting major chemical producers to raise their selling prices. In other words, the increase in industrial raw material prices has moved beyond the chemical chain itself and has spread to packaging, household appliances, consumer goods, construction materials, and even cosmetics and hygiene products. Therefore, it would not be unexpected to face an even more severe wave of inflation if the current trend continues.

If petrochemical exports from the Persian Gulf region face uncertainty, will the Asian market be forced to turn to more expensive suppliers or longer trade routes?

Yes, this will happen both in the short term and the long term from a feedstock supply policy perspective. In the short term, amid feedstock shortages, countries will inevitably look for new sources. For example, it has been reported that the first shipment of Mexican fuel oil has arrived in Asia. The same logic applies to petrochemical feedstocks: China’s increased imports of ethane from the United States in recent months is a case in point. Therefore, when a cheap and nearby hub is disrupted, countries turn to more secure - and naturally more expensive - suppliers. In terms of policy, with an effective disruption of traffic through the Strait of Hormuz, the supply of refinery and petrochemical feedstock in Asia comes under pressure, and the market focus shifts from “margin pressure” to “the real risk of access to feedstock.” This shift is very important, because when the issue moves from expensive feedstocks to a shortage of feedstocks, the problem is no longer purely economic-the continuity of production itself is called into question. This will lead importing countries to prioritize security of feedstock supply at any cost. Therefore, the answer is not a short-term one; it is structural. The failure to secure resources from the Persian Gulf does not just drive up prices - it also changes the geography of trade.

In such a situation, which global players benefit the most from a reduction in regional supply, and could this situation alter the competitive balance in the global petrochemical market?

Several groups stand to benefit the most. First, US producers. American companies have cost advantages due to their access to energy resources, and it appears that their producers are seeing increased orders and improved export margins. This advantage has grown as Asian and Middle Eastern rivals have faced restrictions on naphtha exports or exports of basic petrochemical feedstocks. Additionally, China’s coal-based producers have also benefited from this disruption. According to global reports, shares of some companies in this sector have risen by as much as 30%, because they can rely on domestic coal to bypass part of the feedstock shock affecting imported basic petrochemical feedstocks.

Can the surge in prices of basic petrochemical products create a chain reaction of price increases across consumer industries, ultimately being passed on to the global consumer?

Yes, the inflationary chain in downstream industries is already active. Various sectors - including food and beverages, packaging, cosmetics, toys, household appliances, synthetic rubber, and industrial components -are facing shortages and high prices of plastic and petrochemical materials across Asian companies. According to reports, some factories are operating at only 20% to 30% of their capacity, and this has caused synthetic rubber production to drop by as much as one-third.  This is exactly the same trajectory that could then spread to automotive parts, food packaging, plastic films, containers, pipes, and final consumer products. In terms of pricing, the market has already reached very high levels, with products such as naphtha, methanol, polyolefins, and other related materials approaching historical price highs. Therefore, if tensions last, scenarios involving new price records for certain basic products and persistent disruptions in the supply of raw materials are entirely plausible.

Bells Ring in Global Oil Markets

For decades, pace of the global economy was set by the heartbeat of crude oil. However, today, a somber bell is tolling across the Persian Gulf, Houston and the North Sea. The warning dings are not for a single crisis, but for a fundamental and potentially irreversible shift.

The ring alerts to geopolitics. War in Ukraine, sanctions imposed on Russia, and finally, the joint US and Zionist Regime war against Iran have led the market to experience price hikes, which may damage the world economic growth rate. Markets have priced in chaos, leaving little room for a fear premium. When the bell of disruption rings, traders merely decide to follow developments on a daily basis precisely, and wait to see the ultimate impact of tension in the Strait of Hormuz on the crude oil prices.

Brent and WTI

The unprecedented closure of the Strait of Hormuz by Iran has triggered a seismic price shock in global oil markets, with both Brent and   West Texas Intermediate (WTI) benchmarks surging dramatically in response to the largest supply disruption in recorded history. As of late May 2026, both Brent and WTI are navigating a complex landscape defined by geopolitical tensions and shifting demand dynamics.

The escalation of tensions in the Strait of Hormuz has triggered one of the most dramatic oil price surges in history, with both Brent and WTI recording unprecedented gains since the War began in late February 2026. Prices are easing; after a roughly 6% surge on Monday 4 May 2026, Brent futures have pulled back by around 1% to 1.5% on 5 May 2026, with the July contract trading near $112.72 per barrel. The geopolitical situation in the Middle East remains tense following an exchange of fire near the Strait of Hormuz. This has led to conflicting headlines and significant intraday swings, keeping the market on edge. Similar to Brent; WTI is experiencing a pullback after the sharp rally on 4 may 2026. The market is volatile, with prices easing due to profit-taking and slightly easing supply concerns. The latest trading for WTI was $ 104.81 – 105.90, and on May 2026, WTI price (Intraday) nearly dropped over 3% and stood at $ 106.42. On 29April 2026, the OPEC Reference Basket (ORB) closed at $112.83 per barrel.

Current Pricing and Monthly Performance

As of early May 2026, Brent crude futures for July delivery are trading around $ 111−112per barrel, while WTI futures for June are at approximately $111−112per barrel. In addition, WTI futures for June are at approximately105-106 per barrel. Both benchmarks have now recorded gains for four consecutive months, with Brent up roughly 10% and WTI rising about 5% in April alone.

Magnitude of Disruption

The Strait of Hormuz normally handles approximately 20-25% of global seaborne crude oil trade. The near-total closure has triggered the largest oil supply disruption in recorded history, surpassing the Islamic Revolution, the Arab oil embargo, and the invasion of Kuwait. According to S&P Global, markets have lost a cumulative 1.1 billion barrels since March 2026, with global onshore commercial inventories being drawn down at an estimated rate of 5-6 mb/d.

Supply Outlook and Price Forecasts

The supply disruption has become deeply entrenched. A ceasefire has been in place since April 8, but talks between the US and Iran remain stalled. Iran has vowed to keep the Strait closed, while the US maintains its naval blockade on Iranian ports, leaving approximately 1.5 mb/d of Iranian exports at immediate risk.

S&P Global Ratings recently raised its price assumptions by $15per barrel for the remainder of 2026, now forecasting that of WTI at $15per barrel for the remainder of2026, and now forecasting WTI at $95 and Brent at $100for the year. According to the World Bank’s projections Brent will average100for the year.

According to the World Bank’s projections, Brent will average $ 86 per barrel in 2026 under its baseline scenario, but warns that under a more severe scenario — with the Strait remaining closed through the 2Q 2026 — prices could average between $ 95and $115 per barrel.

According to a Reuters poll of 32 analysts forecasts, average price for Brent will be $ 86.38; and that of WTI  will be $ 80.07 for 2026.

Key Drivers of Continued Price Strength

Several factors continue to underpin elevated prices. The physical crude market is trading at a significant premium to futures contracts, signaling an acute shortage of immediately available supply. The UAE’s decision to exit OPEC effective May 1 has raised questions about producers’ unity and supply coordination. Analysts note that even if the Strait fully reopened today, oil flows would normalize only gradually over several months due to logistical backlogs, infrastructure conditions, and security concerns. Most significantly, the International Energy Agency now estimates that 2026 global oil demand will contract by 80,000 b/d - a sharp reversal from the pre-war expectation of 730,000 b/d of growth.

According to recent data, OPEC+ currently has an estimated 2.8 to 4.56 mb/d of effective spare capacity. However, as the United Arab Emirates (UAE) formally left the group on 1 May 2026, nearly all of this is now concentrated in just one country.

According to Energy Intelligence, estimated spare capacity is ~2.8 million b/d. In the era of post-UAE exit, ~80% is held by Saudi Arabia alone.

According to the International Energy Agency (IEA), estimated spare capacity is ~4.56 mb/d.

Prior to the March 2026, Middle East escalation and UAE exit ;  spare capacity estimates stood at ~4.1 mb/d.

 Spare Capacity

Prior to the UAE’s departure, spare capacity was shared between Saudi Arabia and the UAE. Now, the distribution has shifted dramatically:

• Saudi Arabia, as a swing producer holds the vast majority (approx. 2.4 mb/d).
• Other Members: Iraq, Kuwait, and others hold minimal spare capacity due to ongoing regional conflicts and infrastructure issues.

‘Theoretical’ vs. ‘Actual’ Problem

While numbers represent the capacity on paper, analysts warn that actual physical supply is severely disrupted, which makes the spare capacity unrelated in the short term.

The primary reason is the effective paralysis of the Strait of Hormuz due to the ongoing US-Zionist Regime war against Iran. This chokepointa

handles about 20% of global oil supply, and disruptions have sidelined exports from Saudi Arabia, the UAE, Kuwait, and Iraq by an estimated 12–15 m b/d.

As a result, even though OPEC+ “agreed” to increase production by 188,000  b/d in May 2026, the market views these increases as “purely symbolic” or “theoretical” because the physical oil cannot be shipped via Strait of Hormuz in the Persian Gulf.

The Bigger Picture

The UAE’s exit represents a structural shift in the oil market. By leaving OPEC, the UAE has freed itself from any probable and/or potential quota restrictions, unlocking 1 mb/d of previously constrained capacity and planning to push output toward 5 mb/d.

However, for now, the concentration of spare capacity in Saudi Arabia—combined with the logistical nightmares in the Persian Gulf—means the world’s ability to replace a supply shortage quickly, is extremely limited and hard to materialize until the Strait of Hormuz reopens fully. Even after being reopened, it takes some time to restore its position in the pre-war period.

Strategic Petroleum Reserve

The strategic petroleum reserve (SPR) of the US, China, and Europe are the world’s primary “shock absorbers” against severe oil supply disruptions. Their role has been prominently highlighted by the coordinated release of 400 million barrels in March 2026 - the largest such action in history- in response to the closure of the Strait of Hormuz.

US

As the world’s largest holder of state-controlled crude, the US Strategic Petroleum Reserve (SPR) is designed for rapid, large-scale deployment to counter major supply shocks. The US holds approximately 415 million barrels as of April 2026, with a stock cover of 125 days of net imports. The U.S uses an “exchange” system where companies borrow oil and return it later with a premium (e.g., a 24% premium on returned barrels), allowing the reserve to grow without taxpayer cost. Currently the US is contributing 172 million barrels to the IEA’s 400-million-barrel release, executing the largest emergency drawdown in the SPR’s 50-year history.

Europe

Unlike the US centralized model, Europe relies on a coordinated network of mandatory commercial and government stocks managed by individual member states through the IEA framework. Collectively, EU nations are contributing roughly 20% (approx. 80 million barrels) to the current IEA release. The European countries stockpile well above the IEA minimum of 90 days (e.g., Germany has 130 days, and France has 117 days). The European Commission is actively urging coordination to prevent internal market fragmentation during the crisis.

China

China as the world’s largest oil importer not bound by the IEA rules operates a massive and rapidly expanding strategic reserve. Its role is more opaque but equally critical to global demand dynamics. While the exact size is a state secret, analysts estimate that China holds 900 million to 1.2 billion barrels, covering roughly 125–150 days of net imports. Beijing’s latest five-year plan explicitly mandates the expansion of national oil reserves and major storage projects, signaling a long-term strategic buildup.

 IEA Mechanism

When a major disruption occurs, these entities coordinate through the International Energy Agency (IEA). This system was activated on 11 March 2026.

The US-Zionist Regime war against Iran led to the effective blockade of the Strait of Hormuz, disrupting an estimated 12–15 mb/d of oil flows. The IEA announced a collective release of 400 million barrels (approx. 4 days of global production) to calm prices. The IEA Executive Director stated this action helped lower oil prices by approximately $18 per barrel, though it only offsets a fraction of the daily disruption.

The IEA has stated that the March release represents only 20% of total stocks, with 80% (over 1.2 billion barrels) remaining available if the crisis deepens.

Probable Price Scenarios

If the crisis in the Strait of Hormuz persists, the most authoritative projections point to a baseline scenario, where Brent crude averages 88 per barrel in2026, but a prolonged closure could drive prices into the $95– 118 range, with extreme outcomes potentially exceeding $118 range, with extreme outcomes potentially exceeding $200 per barrel if the blockade continues through the summer.

Final Price

The actual price will not be determined by supply math alone. Analysts highlight several amplifying factors that are already in play:

The World Bank reports that during geopolitical crises, a 1% reduction in oil production generates a peak price increase of more than 11%—nearly double the response associated with normal supply shocks. This is due to panic buying, speculative trading, and “risk premia” built into futures prices.

The IEA’s release of 400 million barrels (the largest in history) is helping to cap prices for now. However, analysts describe this as a temporary “ventilator” for the global economy. Once those barrels are exhausted, prices would face intense upward pressure if the strait is still closed.

Even if the conflict de-escalates, the CEO of the IEA has warned that it will take about two years to recover the energy output lost in the Middle East, suggesting prices will remain elevated for an extended period.

Consequences Beyond

Persistently high oil prices would trigger cascading effects across the global economy:

The World Bank projects that fertilizer prices will rise 31% in 2026, driven by a 60% jump in urea prices (which is produced from natural gas). The UN World Food Program estimates that 45 million more people could face acute food insecurity if the conflict continues.

Developing economies are projected to see inflation average 5.1% to 5.8%, reversing previous deflation trends and potentially forcing central banks to keep interest rates higher for longer.

Accelerated Energy Transition

The shock is creating unexpected winners. China’s SPR (estimated at 1.3 billion barrels) and its rapid electrification push (EV exports surged 140% in March) are insulating it from the worst effects. Meanwhile, high fuel prices are driving a surge in EV demand in Europe and elsewhere, accelerating the long-term shift away from oil.

Market Frozen by Geopolitics

The global oil market is not facing a simple shortage of production capacity, but a complete paralysis of logistics. While OPEC+ possesses theoretical spare capacity (mostly in Saudi Arabia), it is effectively useless because the Strait of Hormuz - the world’s most critical chokepoint - is closed.

Consequently, the world has turned to SPR, as the only available buffer. The US, Europe, and China are releasing historic volumes (400 million barrels via the IEA), but this is a temporary “band-aid,” not an absolute solution.

Once the IEA’s 400-million-barrel release is exhausted, the market loses its only shock absorber. If the Strait remains closed by then, prices will spike dramatically.

While painful, this crisis is accelerating the energy transition (EV sales are surging) and highlighting the strategic importance of national reserves.

In short, it could be argued that the oil is in the ground, but it cannot reach the tanker. Until the Strait of Hormuz reopens, we are burning through emergency stockpiles to buy time.

Tehran, Birthplace of Modern Gas Diplomacy 

The Gas Exporting Countries Forum (GECF), recognized today as one of the most influential international bodies in the energy sector, was born a quarter of a century ago through a smart initiative in Tehran. As the Forum moves toward the future, a review of its evolution - from its administrative structure in Doha to changes in its membership list - reflects its political and technical maturity.

Many analysts consider the meeting held in Tehran in May 2001 as a turning point in the history of the global gas industry. With a proper understanding of the future of global energy, Iran formed the initial core of the GEFC with the participation of countries such as Russia, Qatar, and Algeria. At that time, the main goal was to create a unified voice for producers - a goal that has today been realized in the form of a cohesive organization with an advanced structure.

Iran’s role in the GECF is not limited to its founding. Possessing the world’s second-largest gas reserves, Iran has always served as the balancing weight of the Forum. In reviewing its administrative history, the four-year tenure of Secretary-General Mohammad Hossein Adeli (2014-2017) is recognized as a period of structural transformation. During this period, Iran succeeded in turning the Forum from a purely advisory body into a scientific center and statistical authority, whose forecasting models are now cited by global banks and energy agencies.

Changes in the composition of its members represent one of the most fascinating chapters in the history of the GECF. Norway, which initially participated as an observer member, eventually parted ways due to political pressures from the European Union and conflicts of interest with the continent’s pricing models, choosing instead to maintain its brand as an independent supplier for the West.

Conversely, the GECF has witnessed a new wave of accessions. Mauritania, as the newest member, along with Senegal and Mozambique, has formed a new pole of gas power in Africa. This expansion demonstrates that the GECF has transformed from a regional club into a global institution, extending from the Persian Gulf to the coasts of the Atlantic Ocean and South America.

Iran as a founding member of the GECF has always played an irreplaceable role in the highest decision-making layers of the Forum, including the Ministerial Council and technical working groups. The GECF now has 20 full and observer members and is not only a guardian of producers’ interests against price volatility but is also recognized as one of the key players in energy security discussions and the transition to low-carbon fuels.

The Forum has so far held 7 summits and 27 meetings at the ministerial level. Tehran’s brilliant hosting of the 26th Ministerial Meeting in December 2024 once again underscored Iran’s central role in energy diplomacy.

In addition to hosting the first ministerial meeting in 2001, Iran has so far hosted the third Summit of Heads of State and Government (2015) and several rounds of ministerial meetings (including the 15th, 17th, and 26th sessions). This number of hosted events reflects the trust of member states in Iran’s management during global energy crises and the country’s architectural role within the forum.

The seed planted in Tehran in May 2001 has now grown into a mighty tree, casting its shadow over the entire global energy market.

Knowledge-Based Firms to Help Rebuild War-Torn Areas

A joint meeting between Hossein Afshin, Vice President for Science, Technology, and Knowledge-Based Economy Affairs, and Mohsen Paknejad, Minister of Petroleum, was held at the Ministry of Petroleum. During this meeting, the expansion of knowledge-based cooperation for the reconstruction of facilities and damaged infrastructure of the petroleum industry in the third imposed war was discussed.

Various areas of cooperation between the Office of Vice President for Science and Technology and the Ministry of Petroleum were discussed. During this meeting, they exchanged views, with the aim of utilizing the capacity of knowledge-based companies and the technology ecosystem to rebuild and recover the damage caused by the third imposed war in the oil and petrochemical industries.

The discussions in this meeting mainly focused on identifying technological needs, prioritizing projects and the direct role of modern technologies in restoring infrastructure and enhancing the resilience of the energy sector.
Afshin presented his assessment and evaluation of the scale and extent of damage in the oil and petrochemical sectors during the meeting, and elaborated on the situation of affected areas in the provinces impacted by the war. This presentation paved the way for greater synergy in operational decision-making and the design of short-term and long-term cooperation pathways.

Presenting a report from his provincial visits, he outlined the challenges and obstacles facing damaged companies in various provinces across the country and emphasized the need to address implementation issues and facilitate the faster transfer of technological achievements to the field.

Based on this report; accelerating reconstruction alongside the technological upgrading of infrastructure in this sector, and the utilization of advanced capabilities is of great importance. Relying on the capacities of knowledge-based companies and the technology ecosystem; the Office of Vice President for Science and Technology and the Ministry of Petroleum are supposed to jointly begin a coordinated and phased manner aimed at recovery and reconstruction of facilities and infrastructure in the oil industry damaged in the third imposed war.

The goal of this coordination was stated as strengthening cooperation between the Office of Vice President for Science and Technology and the decision-making body of the government, so that by eliminating parallel processes and resolving implementation overlaps, relevant approvals could be executed more quickly.

The agreement represents a step toward further linking the problem-solving orientation of the oil industry with the country’s scientific and technological capabilities, as well as establishing support mechanisms for the deployment of technology in the path of reconstruction and sustainable development.

Full Transparency in Petchem Production Chain

The head of Downstream Industries Development at National Petrochemical Company (NPC) has noted that production, feedstock consumption, supply volume, and petrochemical sales are transparently and online recorded in various systems and made available to regulatory bodies.

He said stabilization of base prices before the war, the voluntary suspension of exports for certain products, and the supply of essential goods needed by the people during the war period.

Mohammad Mottaqi, explaining about the role of production chain transparency in preventing rent-seeking, intermediation, and hoarding in the petrochemical industry, stated: Across the entire petrochemical production chain, various systems have been operating like a glass room for years, with information being updated and recorded in real-time. The very nature of the systems and standards of the production process in petrochemicals is such that data is continuously recorded and documented.

Referring to the process of production returning to stable conditions, he added: “Several weeks after the wartime damages, the production cycle is returning to stable conditions. This reduces concerns about raw material shortages and production stoppages.”

Mottaqi pointed to the measures taken in coincidence with the start of the third imposed war, saying: “The first step was to maintain base prices on the commodity exchange for all products - not just petrochemicals, but all products in the oil industry’s value chain, both in terms of feedstock and finished products - at pre-war price levels. Global prices rose, but our base prices remained the same as before the war.”

“The second issue was that, as there was no clear outlook for the path ahead, the export of petrochemical products was banned, and only pre-existing commitments to foreign customers were allowed to proceed for export,” he said.

“This is while almost the entire petrochemical industry in the country is non-governmental, and NPC plays a governance, supervisory, and regulatory role. Fortunately, with the cooperation of all petrochemical companies, we were able to manage and control resilience for 35 to 40 days under the prevailing environmental conditions,” he added.

Referring to the supply of petrochemical raw materials linked to essential goods needed by the people, he said: “Even before the war began, measures were taken to secure the essential goods required by the public. For instance, materials such as bottle-grade PET, which is the raw material for producing bottles, or the raw materials needed for manufacturing IV fluids, syringes, flour bags, and similar items, were produced and stored in sufficient quantities in advance to ensure the necessary resilience during the war.”

“Fortunately, our processing units have maintained their production capacity, and our colleagues are swiftly carrying out the necessary measures for recovery and reconstruction,” said Mottaqi.

South Pars Reconstruction Picks up Speed

The chief production coordinator and supervisor of National Iranian Gas Co. (NIGC) has stressed the need for production stability in the national gas grid, announcing the rapid progress of renovation operations at the South Pars refineries.

Mohammad Reza Jolaei said: “Debris removal, reconstruction, and commissioning operations of the damaged units at these refineries have begun under favorable and promising conditions, and this process is continuing at an accelerated pace.”

Highlighting the serious determination of NIGC to bring back these units to production, he added, “There is special dedication to rebuilding and commissioning the damaged sections of the South Pars Gas Complex (SPGC) refineries as quickly as possible, and all technical, engineering, and operational capacities have been mobilized in this effort.”

He noted the key role of human capital in advancing this important mission, saying: “Managers, staff, and specialists from the Gas Engineering and Development Company and the SPGC have begun round-the-clock activities in an atmosphere of empathy, cohesion, firm resolve, and a jihadi spirit to accelerate the debris removal and reconstruction process. This synergy can pave the way for achieving outstanding results in the shortest possible time.”

Referring to the importance of precise planning and utilization of domestic capabilities, Jolaei added: “I hope that with coherent management, targeted planning, and effective cooperation with the Iran Gas Engineering and Development Co. (IGEDC) as the executor of the reconstruction project for these two refineries, significant and lasting actions will be recorded toward the full recovery of the damaged units.”

He also expressed hope that with the continuation of this approach, reliance on homegrown knowhow, domestic expertise, and the relentless efforts of dedicated personnel, the reconstruction process of the damaged refineries will be completed successfully, once again witnessing the brilliance of the country’s gas industry and its effective role in the flourishing of the national economy.

Petroleum Industry Standing by People

Minister of Petroleum Mohsen Paknejad, in a message expressing gratitude to those who, during the hardest days of this land, stood in the trenches of service with sacrifice and selflessness and dedicated their precious lives to national resistance and the sustainability of the strategic oil industry. In his message, he reminded that the oil industry, as in the past, has always stood by the people at historic crossroads and in service of the national interests of the country.

In his message, he stated, “During the tumultuous days of the Third Imposed War, which lasted forty days, the enemy began with the targeting of the Leader of the Nation and the great Supreme Leader of the Islamic Revolution, the martyr Ayatollah Seyyed Ali Khamenei. In addition, a number of people, statesmen, and senior commanders of the country -  the brave men of the operational and support units of the oil industry, with tremendous determination and round-the-clock, exemplary efforts; did not allow the slightest disruption in providing services to the noble people of Iran.

He went on to say, “During those difficult days, the dedicated employees of the oil industry across upstream and downstream sectors, e.g. offshore platforms, export terminals, petrochemical complexes, and transmission lines, stood by their duties with an exemplary sense of responsibility. They managed to guarantee the cycle of production, processing, and export of the country’s oil and gas did not stop despite direct threats and serious dangers,”

The minister added, “Throughout those tense days, the oil industry, like other sectors of the country, did not remain unharmed by the damage and threats of the malicious enemy. The American-Zionist enemy targeted our facilities and inflicted damage, but thanks to Almighty God, the determination and perseverance of the hardworking employees of this industry, and the measures taken, the reconstruction and repair of this damage was prioritized in the shortest possible time, and the process of service delivery continued uninterrupted. This resilience and solidarity demonstrated that the oil industry, as in the past, has always stood by the people at historic crossroads and in service of the national interests of the country.”

According to Paknejad, during those forty days, the malicious American-Zionist enemy targeted some oil industry facilities; and damage was inflicted on the infrastructure of Iran’s oil industry. However, with divine grace and the measures taken in regular management meetings and the tireless efforts of operational forces, the rapid reconstruction and bringing back these facilities to the production cycle were prioritized in the shortest possible time; and the service delivery process continued uninterrupted. What occurred during that period was a clear manifestation of synergy, responsibility, and the commitment of oil industry employees to the national interests of the country.”

“As mentioned before, this resilience is preceded by a proud history in this industry. We remember that during the years of the Sacred Defense (1980-1988 imposed war on Iran), the Ba’athist enemy, aiming to paralyze the country’s economy; repeatedly launched heavy attacks on oil facilities, especially the strategic island of Kharg. As the beating heart of Iran’s oil exports, Kharg was bombed many times, but the courageous staff of the petroleum industry, the seamen of the export terminals, and the operational staff, amid smoke and fire and under rain of rockets and bombs, did not allow Iran’s oil exports to halt. They kept the light of exports shining with great determination through immediate repairs, initiative, and an exemplary spirit, proving that the oil industry remains faithful to its mission even under the harshest conditions.”

Paknejad, who issued this message while honoring the families of the martyrs of the petrochemical industry during the forty-day war, added: “Today, the memory and names of the martyrs of the petrochemical industry stand along that same proud path. Around 10:45 a.m. on Saturday, April 5, the cowardly aggression of the malicious enemy on the Special Petrochemical Economic Zone and the Fajr 1 and Fajr 2 companies in Mahshahr left a heavy wound on the heart of the large family of the oil industry. Six of the hardworking, dedicated, and dutiful colleagues of Fajr Energy Co., while being on duty and in the course of protecting the facilities and ensuring continued production, achieved the great blessing of martyrdom.”

“Honoring the memory of the exalted martyrs of the petrochemical industry, especially the martyrs of the Third Imposed War in Mahshahr and Dehdasht, I would like to appreciate the round-the-clock efforts of the hardworking employees of this industry across the country. They were the dear staff who, under both normal and crisis conditions, pursue their mission of ensuring sustainable energy for the country with a sense of responsibility, expertise, and commitment,” the message concluded.

Gas Industry Involved in Oil Depot Repair

The CEO of Iranian Gas Transmission Co. (IGTC) has highlighted the participation of the staff of this organization and Iranian Oil Pipeline and Telecommunications Co. (IOPTC) in repairing the damaged oil depot transmission line in Rey during the third imposed war.

“Through the tireless and specialized efforts made by the oil industry employees and reliance on their experience and technical knowhow, any disruption in the country’s fuel supply was prevented,” said Peyman Khazraei.

Recalling the efforts of IGTC staff in maintaining the stability of the gas transmission network during the third imposed war, he said: “In addition, the personnel of District 3 of IGTC, during three days of round-the-clock activity involving 1,140 meters of welding, came to the aid of IOPTC. Relying on the experience and technical expertise of both sectors of the petroleum industry, they carried out pipelaying, welding, radiography, coating, and line securing operations with high precision in the shortest possible time.”

According to him, this collaboration enabled the transmission of products through a bypass route without the need for a pumping station to upstream and downstream sectors, preventing a fuel crisis and ensuring that the people remained unaffected by gasoline shortages, with no disruption in the country’s fuel supply.

Recalling the company’s mission in operating the country’s vast gas transmission fleet through pressure boosting facilities, turbocompressors, and the transmission network, which plays a vital role in the energy chain, he said during the third imposed war, thanks to the determination, dedication, and sacrifice of the company’s skilled and committed employees, no gas transmission disruptions occurred anywhere in the country.

Khazraei added, “The strategies of IGTC are based on technical preventive measures, operational drills, and continuous preparedness so that, alongside incident management, negative impacts are minimized, and the gas transmission network remains equipped and on-alert for any crisis or incident.”

He attributed the readiness of all personnel of IGTC to precise safety foresight, timely monitoring, continuous and standard maintenance, drills, and the development and implementation of appropriate procedures, and stated: Alongside this, through careful management of manpower, reduction of high-risk activities, and focus on critical operations, we controlled the consequences of incidents and prevented major damages.

“In the area of pressure boosting, by designing various operational configurations and practicing under different scenarios, we were able to prepare the network to face crises. These drills included internal exercises and joint drills with upstream and downstream facilities, refineries, and provincial gas companies, which enabled our colleagues to act quickly and effectively in real situations,” he added.

He described the third imposed war for IGTC and its employees as filled with moments of bravery, resilience, and solidarity, the result of which is a sense of pride in keeping the lights on in the people’s homes.

Gas Refineries Rebuilding Goes On

During a field visit to the site of reconstruction project of the damaged South Pars refineries, the CEO of Iran Gas Engineering and Development Co. (IGEDC) while stressing the need to accelerate the project implementation process and called for strict adherence by contractors to the schedule. He also stressed the necessity of strengthening solidarity among executive bodies; and expanding technical and operational interactions with the South Pars Gas Complex (SPGC).

Behnam Mirzaei reviewed the latest executive actions and the progress of activities, stressing the necessity of accelerating operations and making maximum use of technical and engineering capacities.

Highlighting the strategic importance of these projects for the stability of gas production and processing in the country, he said, “The reconstruction project of the South Pars refineries is among the sensitive and impactful projects of the country’s gas industry. He also said that it is essential for all executive sectors to pursue the project implementation process with greater speed and precision through cohesion, coordination, and a collaborative spirit.”

Underscoring the need for full adherence to the project schedule, he added, “Precise implementation of the timeline and continuous monitoring of the achievement of set goals is among the main requirements for project success.”

Mirzaei touched on solidarity and cooperation among the companies active in the project as an important factor in accelerating the implementation process. “Achieving the project’s goals is not possible without constructive interaction and effective cooperation among the employer, contractors, and the operating entity, and fortunately, a favorable atmosphere of cooperation and synergy has been established between IGEDC and SPGC,” he added.

Referring to the field visit to various parts of the project and the actions taken, he said, “During the visit, the latest status of executive operations, existing challenges, and available capacities for accelerating the project were reviewed, and required decisions were made to remove obstacles and increase the speed of progress.”

Noting the importance of the project from the perspective of the domestic capabilities of the country’s gas industry; Mirzaei said, “For the first time, the execution of a refinery reconstruction project has been assigned to National Iranian Gas Co. (NIGC) and IGEDC. This issue demonstrates the capability, technical knowledge, and expertise of gas engineers and managers in executing complex refinery projects.”

He expressed hope that with the continuation of technical and operational cooperation between IGEDC, SPGC, and project contractors, the implementation process will continue at an accelerated pace, and the planned objectives will be achieved on schedule.

Fuel Supply underway Despite Infrastructure Damage

The CEO of National Iranian Oil Refining and Distribution Co. (NIORDC) has announced the continued stability of fuel supply in the country despite attacks on some fuel transmission and storage infrastructures.

Mohammad Sadeq Azimifar said: “Following these attacks, with the implementation of technical measures including the activation of alternative transmission routes and the use of the capacity of neighboring provinces, the fuel supply process remained stable, and we did not allow any disruption in the country’s fuel supply."

In a meeting with members of the Agriculture, Water, and Natural Resources Committee of Majlis; Azimifar referred to the recent attacks on some fuel transmission and storage infrastructures. He said, “Despite the damage caused to some fuel facilities and storage tanks in the provinces of Tehran and Alborz; through the round-the-clock efforts made by the refining and distribution industry personnel, operational management was carried out; and no disruption was allowed to occur in the process of fuel supply and distribution across the country.”

He added, “Immediately after these attacks, the operational teams of NIORDC, by implementing technical measures including the activation of alternative transmission routes and utilizing the capacity of neighboring provinces, maintained the flow of product transmission to consumption points.”

Azimifar said that the plan to rebuild and reinforce the tanks of the damaged facilities has been urgently placed on the agenda. He continued as saying, “Part of the capacity of the damaged facilities will be restored in the short term; and in the medium term, plans are underway to construct new tanks and develop storage infrastructure with an approach to increasing safety and the dispersion of facilities.”

Referring to the damage caused to other oil industry facilities, he added, “The attack on South Pars has had consequences for the country’s gas balance, and it is necessary to pursue consumption management across all sectors with an approach of prioritization and inter-sectoral coordination.”

“Through synergy among executive bodies and consumption management in various sectors, we may overcome the challenges ahead and maintain the country’s sustainable energy supply," he said.

POGC Focuses on Rebuilding South Pars Refineries

Touraj Dehqani, the CEO of Pars Oil and Gas Co. (POGC), during a visit to the South Pars refineries damaged in the third imposed war, said: “Given the necessity of restoring the refineries to help optimize energy management in the country, the company has placed the reconstruction process on its agenda with full force.”

He held a meeting with the reconstruction supervisors of two damaged refineries and other senior executives of the company in the South Pars operational zone, emphasizing the need to accelerate actions. In the meeting, he said, “Continuous weekly meetings will be held to follow up on reconstruction, enhance coordination, remove obstacles, and closely monitor the progress of activities. Based on the decisions made, reconstruction projects will be pursued within defined work packages.”

Referring to the emphasis by the Minister of Petroleum and the CEO of National Iranian Oil Co. (NIOC) on the necessity of expediting the reconstruction process, Dehqani expressed hope that, with the cooperation and support of all stakeholders, the pace of activities would move forward swiftly.

Stressing the need to speed up debris removal and work environment safety to commence the reconstruction process, he said, “The process of selecting contractors for the reconstruction projects is underway. Given past experiences and the readiness of engineering and construction documents, we will quickly move into the execution phase and equipment ordering.”

During his visit to the South Pars Phase 14 refinery, Dehqani also reviewed the progress of reconstruction operations for the damaged unit of that project. In a meeting with contractors, he emphasized the necessity of accelerating the fulfillment of obligations and presenting a detailed timeline for completing the remaining executive actions.

He said, “The petroleum industry bears a tremendous responsibility in restoring production in refinery reconstruction projects, and it will carry out this critical responsibility effectively by leveraging its skilled and capable human capital.”

During this visit, which was attended by project managers, contractors, and executive officials of South Pars Phase 14, the latest status of reconstruction operations and preparation of the damaged unit of this phase was reviewed, and the process of implementing technical measures to bring this section back into production as quickly as possible was explained.

Pezeshkian Heaps Praise on Oil Industry Staff

President Masoud Pezeshkian, during a specialized meeting with the Minister, deputy ministers, and senior executives of the Ministry of Petroleum, reviewed the energy sector situation, the process of oil production and export, the status of fuel supply, and developments in the gas and petrochemical industries.

He said, “The round-the-clock efforts made by the petroleum industry staff are worthy of appreciation, because the petroleum industry did not let the country’s production and fuel supply cycle to be disrupted under wartime conditions.”

Stressing the necessity of realistically explaining the current situation to the public, he said, “The people must know that the country faces limitations in the supply of gasoline and some energy carriers, and successfully overcoming these conditions requires public cooperation and a change in consumption patterns.”

Pezeshkian added, ”In a situation where the country is facing external pressures and damage to part of the energy infrastructure, continued unnecessary consumption and the widespread use of single-passenger vehicles are examples of poor consumption and waste of national resources, and everyone must feel a sense of responsibility in this regard.”

He laid emphasis on the development of a culture of using public transportation, saying: “We must reduce fuel consumption so that the resources saved from conservation, instead of importing gasoline for unnecessary uses, can be spent on people’s livelihoods, strengthening the support system, and providing food vouchers for low-income groups.”

Underscoring the need to revise the expansion of the gas distribution Pezeshkian said,” In regions where the climatic conditions are compatible with the use of other fuels, there is no need for unregulated expansion of the gas network, and decisions must be made with an expert perspective and based on efficiency.”

He highlighted the necessity of culturalization in the area of gas conservation and the implementation of incentive and deterrent policies for low-consumption and high-consumption subscribers, and said, “Energy consumption management will not be possible without public participation and modifying consumption behavior."

Pezeshkian called for the optimization of energy consumption in buildings and low-efficiency centers; adding, “Some administrative and government buildings lack the required efficiency for a considerable part of the year, yet they still consume a lot of energy. Therefore, these spaces should be consolidated, organized, and managed to prevent resource wastage.”

Stressing the Administration’s full support for the country’s foreign currency-earning industries, especially the petrochemical industry; he stated, “The government will seriously pursue the supply of gas and electricity to strategic and export-oriented industries. He also mentioned that we will not allow the production cycle in the petrochemical industry to be disrupted, because this industry plays a crucial role in providing foreign currency, employment, and the stability of the country’s economy.”

Pezeshkian assigned two specific missions to the Ministry of Petroleum and said, “First, the prioritization of gas allocation to productive, wealth-generating sectors with high economic efficiency. Because if energy waste is prevented, these resources can be made available to industries and economic sectors, thereby generating billions of dollars in income and added value for the country.”

He added, “The second mission is to formulate a system of quota allocation and provincial distribution based on the actual needs of each region, so that through precise resource management, sustainable energy supply for the country’s vital and strategic sectors can be ensured.”

Pezeshkian touched on maximizing the use of the railway network capacity for exporting petrochemical products, saying, and “The transfer of petrochemical products via rail transport, especially in the current situation, is a strategic measure that helps reduce costs, increase safety, and ensure the sustainability of exports.”

War Defeated by Iran’s Energy Resilience

Elahe Baqeri Sanjarie

“The Iranians are stronger than what was imagined”. It was said by Friedrich Merz, the Chancellor of Germany, referring to the American-Zionist Regime war against Iran—a war that, in the imagination of its planners, was supposed to incapacitate Iran and leave it in ruins. However, the plot not only failed, but also the resilience and resistance of the Iranians, their ability to manage amidst the crisis, and the extensiveness of their infrastructure went far beyond what many countries had imagined, forcing them to acknowledge Iran’s power. As Anwar Gargash, an advisor to Mohamed bin Zayed, the Head of the United Arab Emirates, declared in a press conference “Even without having nuclear weapons, Iran acts like a superpower.” Such acknowledgments of Iran’s power do not only refer to military capability; the main goal of this war was the collapse of infrastructure, yet Iran’s energy resilience during the 40-Day War upended all of Western calculations.

Wild Dream

The American-Zionist Regime attack on Iran, known as the third imposed war, was aimed at destroying energy infrastructure and national unity. According to Donald Trump, the President of the United States, Iran’s infrastructure was supposed to be destroyed within days, plunging the country into darkness. Following these plans, over the course of 40 days, extensive strikes were carried out on oil depots, ports, petrochemical industries, gas refineries, and oil fields. These attacks were intended to halt the stable supply of fuel in a country where natural gas accounts for 75% of its energy mix. Paralyzing oil and petrochemical exports, creating a domestic fuel crisis, and generating social discontent were among the other objectives of the war. However, the performance of the petroleum industry personnel was such that, in terms of production security and sustainable energy supply, Iran bore no resemblance to a war-torn country.

Action on Infrastructure

In the first round of attacks on energy infrastructure during the third imposed war, four oil depots were targeted by the American- Zionist Regime strikes: three oil depots in Shahran, Shahr-e Rey, and Aqdasiyeh in Tehran, and one depot in Karaj. According to what Iran’s enemies had predicted, attacking this infrastructure was supposed to halt fuel supply and trigger a massive wave of domestic unrest. However, just a few hours after the American-Zionist Regime jet fighters struck the oil depots, safety and recovery operations were carried out in a very short timeframe, thanks to the efforts made by National Iranian Oil Refining and Distribution Co. (NIORDC) and other colleagues in the oil industry. On the very first day after the attack, Minister of Petroleum Mohsen Paknejad visited one of the targeted oil depots. According to Paknejad, to compensate for the damage inflicted on energy transmission and support infrastructure, the Ministry of Petroleum took measures in the shortest possible time to prevent disruptions in the fuel supply

chain, reconfigure transmission routes, and increase strategic reserves.

Fuel Supply Never Stopped

One of the most important reasons that thwarted the enemy’s calculations for halting the fuel supply in Iran is the vast network of petroleum product distribution that serves the entire country. Furthermore, there are regional and extra-regional connections in the distribution process. In addition, the regional distribution of depots, the multi-layered structure of petroleum product storage, and strategic fuel reserves were among the other factors that caused the enemy’s goal of creating a domestic crisis in fuel supply to fail.

Keramat Veis-Karami, the CEO of National Iranian Oil Products Distribution Co. (NIOPDC), said, “Various scenarios for such a situation had been designed in advance to ensure the fuel supply for our fellow citizens. Accordingly, necessary measures were taken to supply gasoline to the provinces of Tehran and Alborz, sufficient gasoline reserves were stored in the oil depots, and the supply of gasoline is ongoing”.

In the meantime, in the initial hours following the attacks on the oil depots, an announcement from NIORDC stated “despite some damage caused to the sector, relying on strategic reserves, the activation of alternative routes, and pre-determined arrangements, the issue of fuel supply is under control and there is no worry regarding the sustainability of supply.”

The role of the smart fuel system should not be overlooked. On 26 January 2026, before the start of the third imposed war, the CEO of NIORDC Mohammad Sadeq Azimifar announced the indigenization of smart fuel systems in the country and identified the implementation of precise measurement and monitoring plans in the production, transmission, and distribution chain of petroleum products as a strategic necessity for the oil industry. According to him, this step is an effective move toward reducing foreign dependency, creating employment, and increasing the share of alternative fuels in the country’s energy mix.

All of these factors ultimately enhanced the oil storage capacity in Iran—an element that facilitates crisis management for the country. According to analysts at Rapidan Energy Group, in critical and wartime conditions, Iran may store its produced oil in internal tanks and storage tankers for several weeks. If maximum storage capacity is utilized, this period may even extend to more than two months.

Futile Attempt

In the second round of attacks on energy infrastructure, the United States carried out extensive airstrikes on Kharg Island—a strategic island and a key oil export hub located off the coast of the Persian Gulf in Iran. The attack on this strategic region occurred at a time when threats to target the island’s oil infrastructure had increased in order to pressure Iran into opening the Strait of Hormuz.

The island, which covers an area of about 20 square kilometers and is located in Bushehr Province, northwest of the Strait of Hormuz, is Iran’s most important oil loading and export terminal due to its proximity to the country’s southern oil fields. Approximately 90% of Iran’s crude oil exports is conducted through its oil terminals. In addition to loading facilities, the island also hosts one of Iran’s largest oil storage centers. It is clear that the reason it was targeted was solely to strike a blow at Iran’s oil export capacity—an objective that was not achieved.

Because prior to the maritime blockade, Iran had managed to increase its export oil revenues during the 40-Day War. Before the war, due to increased supply, oil prices had fallen to the mid‑$60 range, but with the outbreak of war in the Persian Gulf, oil prices reached as high as $117 per barrel. According to a report by Oil Price, the price of Iranian crude oil grades increased by more than four percent during the 40-Day War.

Exports at Favorable Levels

Minister Paknejad said: “The performance of my dear

colleagues across the industry during the 40-Day War and afterward was truly outstanding. Throughout all the days of the war, we had no decline in crude oil production, and exports continued in a satisfactory manner.”

“If we faced any challenges, they were overcome in the shortest possible time, and solutions were implemented to get through the difficult days. Some damage was caused during the 40-Day War and strikes hit certain facilities, but their rebuilding was put on the agenda in the shortest possible time, and the process has been proceeding well to this day. We hope to repair the damage within an appropriate timeframe,” he added.

The American- Zionist Regime war against Iran proved very costly for the Arab countries of the Persian Gulf region. The March 2026 report by OPEC confirms this. According to the report, following a sharp decline in oil production by the Arab countries of the region, Iran rose to become the second-largest producer in OPEC in March 2026. This is the first time in the past 12 years, since the imposition of oil sanctions against Iran, that Iran has climbed to second place in OPEC.

Gas Industry Resilience

The third wave of enemy threats against energy infrastructure involved extensive attacks on certain facilities in the Pars Special Economic Energy Zone (PSEEZ) on March 17. During these attacks, four gas refineries in the South Pars region were struck—four refineries that account for a significant share of the country’s gas production. These attacks occurred at a time when the country’s gas industry was in its year-end consolidation phase, when suddenly it was thrust into crisis management and a major test of decision-making capacity, institutional coordination, and structural resilience.

In the very first hours and days following the attacks on South Pars, Minister Paknejad, National Iranian Gas Co. (NIGC) CEO Saeed Tavakoli, and many other officials were present in the region to witness and oversee crisis management and ensure the stability of fuel supply. This is because South Pars, as the world’s largest gas field, is the main pillar of the country’s energy supply. Producing over 700 mcm/d of rich gas, South Pars supplies about 70% of the country’s natural gas needs. These characteristics caused a wave of concern among the public after news of the attack on South Pars facilities was released, leading people to imagine the worst possible scenarios—especially given the enemy’s media frenzy and displays, which suggested that Iran’s energy infrastructure and domestic fuel supply capability were about to be destroyed.

However, in reality, there was no sign of the enemies’ predictions. The unified management of the Ministry of Petroleum, the maturity of NIGC, and their readiness in crisis situations meant that the incident at the South Pars Gas Complex (SPGC) during the imposed war was well managed, and the country’s gas network remained stable.

Mohammad Reza Jolaei, director of Coordination and Production Supervision at NIGC, announced in the early hours of the attack that gas was being produced under safe conditions and that the national gas grid remained stable.

He stated that there were no restrictions on sending gas to different parts of the country and that some units were being prepared to return to production.

According to Behnam Mirzaei, the CEO of Iranian Gas Engineering and Development Company (IGEDC), “under such circumstances, the most important issue is not merely the extent of the damage, but the speed and quality of the organizational response. The country’s gas network immediately entered emergency management mode, and by readjusting flows and prioritizing consumption, supply stability was maintained for the household sector. Although the action required temporary restrictions in some areas of consumption, it prevented the formation of a widespread crisis.”

Petchems Remain Active

The fourth round of enemy attacks on the country’s energy infrastructure began in March/April 2026 with an attack on the Tabriz Petrochemical Plant. Subsequently, ancillary facilities of the Mahshahr Petrochemical region and the Amir Kabir Petrochemical Plant were also targeted by American- Zionist Regime strikes—attacks carried out with the aim of exerting more pressure on the people and meeting their needs, as well as putting pressure on the country, especially the Ministry of Petroleum. The enemies’ prediction was a halt in production, the creation of a chaotic market, and a crisis in the supply of final products.

However, here too, real-time decisions made amid the crisis, precise prioritization, and coordination between the government and downstream industries ensured that the country’s productive pulse was maintained. This is especially significant given that a large portion of Iran’s industries had achieved substantial self-reliance during the sanctions period. The sum of these factors meant that, contrary to the media hype, despite the

damage sustained, the petrochemical industry did not stop for a moment and passed this difficult test with full strength.

Petchem Resilience

The first action taken to ensure the stability of this industry after the attacks was the protection of essential goods production lines. The production of items that have a direct impact on public health and daily consumption was prioritized, while the manufacturing of lower-priority products was temporarily set aside. On the other hand, Mohammad Mottaqi, director of Downstream Industries Development at National Petrochemical Co. (NPC), announced a three-phase plan to compensate for the shortage of raw materials. During this war, many industries dependent on base materials, especially petrochemical products, faced restrictions. Nevertheless, a significant portion of production units continued to operate, demonstrating a level of resilience within the industry.

Among the reasons for this resilience—which fell outside the enemy’s calculations—are the diversity of production complexes, decentralized exports through multiple terminals, the ability to change feedstocks, and floating storage tanks, which are responsible for storing raw materials, unit feedstocks, intermediate materials produced in the processes, as well as finished products and materials for loading and distribution. These serve as a crucial tool in the technological chain of extracting, transporting, and distributing crude oil and its products.

Although the 40-Day American- Zionist Regime attacks on Iran caused some damage, they never succeeded in their primary goal: the destruction of infrastructure and the collapse of Iran’s energy network. This goal was so serious for the enemies that even hours after the ceasefire was announced, they attacked the Lavan oil refinery on Siri Island.

Iran Role in New Energy Order

The 40-Day War was waged against many targets in Iran and was supposed to disrupt the country’s infrastructure and energy network. But the real results of this war revealed the weaknesses of developing countries, especially in energy supply. The shock of this war continues to affect global markets. Analysts believe that oil and gas trade will never be the same after the attack on Iran, and one should expect a 'permanent change in the world energy order.

Perhaps it would have been better for the American- Zionist Regime enemies to study a bit about the geography, history, and—most importantly—the civilization and resilience of this land before attacking Iran. One of the most important reasons that has led global analysts to expect a “permanent change in the world energy order” is the significance of the Strait of Hormuz, which Iran’s enemies had not taken into account in their pre-war calculations. On the other hand, damage to oil and gas infrastructure in the Persian Gulf countries, disruption of maritime transport, and increased geopolitical risk are other factors that have given rise to the notion of a “new energy order”—an order in which Iran is likely to play a prominent role.

Practice of Resilience

Another point is that Iran had the experience of eight years during the first Imposed War (1980-1988); and despite all the damage and bitterness it entailed, it provided the country with very useful and instructive experiences. The most important of which were resilience in times of crisis, reduced vulnerability, and the continuation of national life in the face of enemy threats. These lessons learned, ensured that during those eight years of war, oil revenues remained the main source of government financing.

Although at times revenues declined due to attacks on oil facilities, they never ceased, and Iran, by exporting between 1 and 1.5 mb/d, supplied a significant portion of its foreign currency needs. Much like today, where the oil industry has stood uninterrupted under the shadow of enemy jet fighters. This is a point also noted by Omid Karimian, Vice Chairman of Majlis Energy Committee, who, referring to the positive performance of the Ministry of Petroleum across its chain of activities—including production, exports, fuel supply, and gas distribution—during the third imposed war, states: “The continuity of production and exports, the supply of fuel needed by the people, and gas distribution during the days of the third imposed war are commendable. In the area of increasing oil revenues, significant successes have been also achieved, such that oil exports did not stop during the war, even under enemy attacks—an achievement that also deserves appreciation and thanks.”

Iranians Stronger than Thought

Beyond the experience of war, Iran has lived under the shadow of Western and European sanctions for decades. Sometimes these sanctions have eased, and at other times—like today—they are at their most severe, but they have never been fully lifted.

Under these circumstances, Iran, with empty hands and no support from any foreign country, relying solely on the technical knowledge, expertise of its specialists, and domestic capabilities, has achieved remarkable accomplishments—in many of which, especially in the oil industry, it competes with developing countries. The specialists, companies, and enterprises that kept the country on a path of growth and prosperity for years under the pressure of sanctions did not stop for a moment during the 40-Day War; they did not give up amidst the flames, smoke, and explosions. This is why the world came to acknowledge, “The Iranians are stronger than what was imagined”.

Fresh Opportunities for Investment in Iran Energy Sector

Pooneh Torabi

With the end of the 40-Day War and the establishment of a ceasefire between Iran and the United States, Iran’s petroleum industry has entered a new phase-one that can be described as the beginning of a reconstruction season for the country’s energy infrastructure. During the war, part of Iran’s energy facilities and infrastructure sustained damage. However, Iran’s petroleum industry began assessing the damage and reconstructing its installations even in the first days after the cessation of hostilities. Now, this process could go beyond mere restorative efforts and become the starting point for a new wave of modernization projects and investment in Iran’s energy industry.

This development comes at a time when energy security has once again become one of the primary concerns of the global economy. Geopolitical tensions, disruptions in energy supply chains, and rising global demand for oil and gas have led many countries to seek more reliable sources of energy. In such an environment, rebuilding Iran’s petroleum industry infrastructure could not only help restore damaged capacities but also provide an opportunity to define new projects and attract investment in one of the world’s most important energy markets.

Reconstruction Kicks Off

One of the notable features of Iran’s petroleum industry in the recent period was the speed with which reconstruction operations began. Even while the regional environment was still affected by the aftermath of the war, operating companies, industrial contractors, and engineering teams from the petroleum industry quickly launched the process of assessing damages, securing facilities, and planning for reconstruction.

Mohsen Paknejad, Iran’s petroleum minister, noting that some of the country’s petroleum industry facilities were damaged during the war, said the reconstruction of these facilities has been prioritized to be completed in the shortest possible time. He expressed hope that the reconstruction would be successfully finished within an appropriate schedule.

As a result, a division of labor for the reconstruction process of war-damaged facilities was set in motion. For the first time, the reconstruction of two gas refineries in Assaluyeh was assigned to National Iranian Gas Co. (NIGC). Likewise, the reconstruction of damaged facilities at petrochemical complexes, oil depots, and the Lavan refinery has begun with the same level of urgency.

This rapid response demonstrates that Iran’s petroleum industry not only possesses high operational capability in maintaining production stability but also has considerable experience in crisis management and restoring infrastructure to operational status. Decades of operating under complex economic and technical conditions, a vast network of domestic contractors, and the country’s significant engineering capacity have today become one of the key advantages of Iran’s energy industry on the path to reconstruction.

Energy Infrastructure Renovation

However, reconstruction in the energy industry does not simply mean repairing equipment or replacing damaged facilities. In many countries, periods of energy infrastructure reconstruction have turned into opportunities for technological upgrading, improving efficiency, and redesigning certain industrial installations.

In Iran as well, this phase could lead to a reassessment of the design of some energy infrastructure components, the adoption of new technologies, optimization of energy consumption, and the enhancement of safety standards and industrial resilience. In other words, reconstruction - beyond restoring existing capacities - could also help strengthen operational capability and enhance productivity across the country’s energy chain.

Global Quest for Energy Security

Recent developments in the global energy market have shown that energy security has once again become one of the most important concerns of the world economy. The war in Ukraine, disruptions in energy supply chains, competition over natural gas resources, and rising energy demand in emerging economies have all led many countries to seek diversification of their energy supply sources.

In such an environment, countries that possess large oil and gas reserves and have the capability to develop energy production and export infrastructure may play a significant role in ensuring global energy security. With one of the world’s largest hydrocarbon reserves and a geopolitical position connecting the region’s energy markets, Iran has significant capacity to play such a role.

Message to Investors

Within this framework, the launch of reconstruction projects in Iran’s petroleum industry may send an important signal to investors and companies active in the global energy market. This signal indicates that Iran’s petroleum industry is not only restoring its infrastructure, but can also turn this phase into an opportunity to define new development projects and attract investment in the energy sector.

Reconstruction projects are typically accompanied by extensive demand for engineering services, industrial equipment, new technologies, and financial resources. For this reason, such projects have become one of the most important areas for attracting investment in the energy industries of many countries.

In Iran as well, areas such as the modernization of industrial utilities, upgrading refining and gas facilities, developing energy storage infrastructure, efficient energy use, and completing the petrochemical value chain can be among the most important focal points for investment during the reconstruction period.

Local Engineering Experience

One of Iran’s key advantages in this regard is its extensive engineering and industrial experience in the oil and gas sector. Over the past years, domestic engineering and contracting companies have been able to carry out a significant portion of the energy industry’s development projects, achieving considerable capabilities in areas such as equipment design,

turbomachinery manufacturing, instrumentation, and control systems.

This industrial capacity may serve as a foundation for implementing reconstruction projects. However, executing major infrastructure modernization projects in the energy sector typically requires substantial financial resources - an aspect that could also pave the way for the participation of international investors and companies in Iran’s energy projects.

Golden Opportunity

In many countries, periods of energy infrastructure reconstruction have become important windows for defining new projects and attracting investment. The experiences of countries such as Iraq and Kuwait show that rebuilding the petroleum industry may lead not only to the restoration of damaged capacities, but also to increased production, equipment modernization, and the development of export infrastructure.

For Iran as well, the current phase could become a golden opportunity to redefine part of its energy infrastructure—an opportunity in which the reconstruction of facilities is accompanied by technological development, efficiency improvements, and the attraction of investment for new projects.

Multibillion-Dollar Market

Overall, Iran’s petroleum industry now stands on the threshold of a phase that could herald a new chapter in the development of the country’s energy infrastructure. The commencement of reconstruction after the 40-Day War demonstrated that this industry possesses the required managerial and technical capability to rapidly restore its capacities.

If this process is accompanied by capital attraction, the development of technological cooperation, the design of new models for participation in energy projects, the reconstruction of infrastructure could go beyond a mere restorative effort. It may also become the starting point for a structural modernization of Iran’s petroleum industry - a path that not only strengthens the country’s energy capacities but also enhances Iran’s role in ensuring regional and global energy security.

Initial estimates in specialized energy industry circles indicate that reconstruction and modernization projects for Iran’s oil and gas infrastructure could turn into a multibillion-dollar market in the upcoming years. Part of these projects will be dedicated to repairing and reconstructing damaged facilities, but the more significant portion relates to equipment modernization, technological upgrading, and enhancing the resilience of energy infrastructure.

In many countries, periods of energy industry reconstruction are typically accompanied by the definition of projects that go beyond merely restoring previous capacities. In such circumstances, governments and energy companies strive to use the opportunity to upgrade technology, improve efficiency, and develop new production and processing capacities. In Iran as well, such an approach could lead to the formation of a new wave of industrial projects across various segments of the energy chain.

In the upstream sector of the petroleum industry, some oil and gas fields, as well as processing facilities, require equipment modernization and operational system upgrades. The use of new technologies in reservoir management, the upgrading of process equipment, and the optimization of production operations could be among the main focal points for investment in this sector.

In the downstream sector as well, numerous projects could be defined in areas such as refinery modernization, improving the quality of petroleum products, enhancing energy efficiency, and developing petrochemical units. Many refineries around the world have been able to improve production efficiency and enhance the added value of their products through modernization projects in recent years.

Another important area for investment during the reconstruction period is utility infrastructure and industrial services. Industrial power and utility facilities, cooling systems, industrial water supply, and energy distribution networks are among the sectors that play a vital role in ensuring stable production at oil, gas, and petrochemical complexes. Modernizing these infrastructures can not only escalate industrial resilience but also significantly reduce energy consumption.

Furthermore, the development of storage and logistics infrastructure for energy represents another key area for investment in Iran’s petroleum industry. Increasing the capacity of crude oil and petroleum product storage tanks, upgrading export terminals, modernizing transmission pipelines, and utilizing intelligent monitoring and network management systems may all help strengthen energy supply security.

Some unofficial estimates in specialized energy industry circles suggest that the total portfolio of reconstruction, modernization, and infrastructure development projects in Iran’s oil and gas sector could require tens of billions of dollars in investment over the coming years. Such potential, if accompanied by well-designed financing mechanisms and investor participation frameworks, could become one of the largest project markets in the region’s energy sector.

From this perspective, the reconstruction of Iran’s petroleum industry is not merely a technical necessity for restoring infrastructure; it can also become an opportunity to define major industrial projects, attract investment, and strengthen Iran’s position in the global energy market. At a time when the world is seeking reliable energy sources more than ever before, the development of Iran’s oil and gas infrastructure can both help meet domestic needs and play a role in ensuring energy security at the regional level and in global markets.

Story of Wartime Distribution Network Resilience

On the evening of Saturday, 8 March 2026, three oil depots in Shahran, Shahr-e Rey, and Aqdasieh in Tehran, as well as a depot in Alborz Province, were targeted in an attack. The attack damaged part of the country’s fuel supply and distribution infrastructure. According to Mohsen Paknejad, the Minister of Petroleum, the aim of these attacks was to exert direct pressure on people’s lives by disrupting fuel supplies. Following the announcement of a ceasefire on 8 April 2026, an attack on the Lavan oil refinery facilities also failed to halt the flow of petroleum product supplies, and the country’s fuel supply and distribution network did not go offline for even a single day.

Damage on Infrastructure

In the very first hours following the attack, despite damage to the facilities and the martyrdom of four oil industry employees, firefighting operations, site security, and crisis management were promptly prioritized. Simultaneously, pre-defined emergency mechanisms were activated, and alternative routes for product transmission were brought online. National Iranian Oil Refining and Distribution Co. (NIORDC) issued a statement detailing the situation, emphasizing “Relying on strategic reserves, the activation of alternative routes, and pre-established arrangements, the fuel supply situation is under control, and there is no concern regarding supply stability.”

This approach was also underscored at the executive management level. Keramat Veis-Karami, the CEO of National Iranian Oil Products Distribution Co. (NIOPDC), noted that critical scenarios had been anticipated in prior planning, stating: “Various scenarios for such a situation had been designed in advance to ensure fuel supply for our fellow citizens.” He emphasized the sufficiency of existing reserves and added that gasoline supply in Tehran, Alborz provinces, and other parts of the country continued without any disruption to the normal course of operations.

On the ground, there were no signs of disruption in the distribution flow. Petrol and CNG stations continued their operations, the fuel transport fleet remained operational, and despite a temporary increase in customer visits in some areas, fuel supply never cut off. What occurred resembled more a shifting of pressure within the network rather than a widespread disruption—a situation indicating that distribution management had managed to contain the impact of the damage to those limited points.

Demand Management

In the initial days following the attack, while supply continued, demand management became one of the main focal points. The increase in visits to petrol stations stemmed more from cautious consumer behavior than from an actual shortage—an issue that, if left unchecked, could have led to long queues and additional pressure on the distribution network. In this context, Reza Navaz, spokesperson for National Fuel Station Operators Union, commenting on the customer pattern, stated: “Approximately 30% of refueling visits are by vehicles that arrive with nearly full tanks and take less than 8 liters of fuel.”

In response to this situation, regulatory policies in the distribution sector were temporarily implemented.

Reducing the fuel dispensing cap from 30 liters to 20 liters was one of the most significant of these measures, introduced with the aim of achieving a more balanced distribution and increasing public access. These restrictions were not fixed or uniform; they were adjusted based on consumption conditions in different regions and over varying time periods. The announcement by NIORDC also emphasized that these actions were being carried out with the goal of “fair and sustainable distribution of fuel needed by fellow citizens during this transitional period.”

Alongside these measures, public recommendations were also put forward as part of demand management, including using personal fuel cards, avoiding unnecessary trips to fuel stations, and refraining from storing fuel in containers. In practice, these steps helped reduce pressure on the network and allowed the distribution flow to continue with greater stability.

At the same time, emphasizing the sufficiency of reserves played an important role in calming the situation. Fatemeh Mohajerani, the government spokesperson, commented on the fuel supply situation, stating: “Currently, gasoline reserves are sufficient, and there is no cause for concern for the people regarding gasoline supply.” She explained that oil industry workers had worked very hard during this period and managed to keep the situation under control, all while fuel tankers were continuously moving and gasoline was reaching the stations without any disruption and disorder.

This same picture was confirmed by Mohammad Jafar Qaeim-Panah, Vice President for Executive Affairs. Following the March 8 attacks, he spoke with the CEO of NIORDC and announced that necessary preparations had been made in advance and that, up to that point, there had been no particular issue in fuel supply trend. Qaem-Panah, however, asked the public to exercise conservation in other sectors as well and to avoid unnecessary travel so that conditions could return to normal more quickly. First Vice 

President Mohammad Reza Aref, in a phone conversation with the CEO of NIORDC, while commending the measures taken in fuel supply and distribution, highlighted the necessity of timely fuel supply across the entire country. He stated that the country’s current affairs must be managed properly even under wartime conditions, and that meeting the people’s needs and maintaining public calm are the government’s primary priorities. Aref later noted that the performance of NIORDC under these circumstances had been “beyond expectations,” and that the petroleum industry workers had managed to neutralize the enemy’s plot to disrupt people’s lives.

Field of Operation

Having passed the initial response phase, management focus shifted toward continuous monitoring and stabilizing the flow of production and distribution—where on-the-ground assessments of facility conditions and coordination among different segments of the supply chain became increasingly important. Within this framework, Mohammad Sadeq Azimifar, the CEO of NIORDC, during his visits to refineries, oil depots, and transmission pipelines in Isfahan, Fars, and Hormozgan provinces, closely examined the operational status of the units.

In meetings with the managers of the Isfahan refinery and related entities in the transmission and distribution sectors, he emphasized the sustained production and maintenance of coordination among network components, and praised the performance of these sectors in sustaining the stability of the fuel flow. At this stage, the issue was no longer just about getting through a period of intense pressure, but also about how to sustain operations at the same level of production and distribution.

In this regard, Gholam Reza Baqeri Dizaj, the CEO of the Isfahan oil refinery, while commenting on the facility’s operational status, emphasized the continuation of production alongside the execution of development projects—an approach indicating that planning in this sector was not focused merely on short-term management.

Shahram Ahmadi, Director General of HSE at the Ministry of Petroleum, also noted the working conditions in operational areas, stating “Colleagues, with dedication and full capability, showed up in operational zones and directly targeted sectors, and despite emergency conditions, no problems arose in supplying fuel to the people.” He also referred to the support and logistics arrangements that enabled the continuity of operations under these circumstances.

CNG, Alternative Fuel

Alongside the gasoline supply stream, CNG (compressed natural gas) came into the consumption management framework during this period as a complementary energy supply route. Ardeshir Dadras, Chairman of the Board of the CNG Industry Association, announced that the majority of CNG stations in Tehran province, from the very first days, began supplying CNG fuel free of charge to the public transportation fleet and taxi services. According to him, this measure effectively shifted part of the consumption burden from the gasoline network to an alternative fuel.

He noted that the volume of visits to CNG stations in Tehran province saw a significant increase in the initial days, later stabilizing at a sustainable level. He also highlighted the role of CNG stations in Alborz province, some of which continued free supply for a temporary period, helping to moderate the pressure on gasoline stations in certain areas.

The role of CNG can be assessed mainly as a complementary pathway for managing consumption demand—a pathway that, during periods of increased demand, diverted a portion of daily consumption away from the gasoline network and contributed to relative balance in distribution. The shift in consumption was achieved without requiring structural changes to the distribution network, simply by activating existing capacity.

Institutional Coordination

One of the important aspects of the 40-day war was the high level of coordination between the Administration, the Ministry of Petroleum, and the parliament. President Masoud Pezeshkian, during a visit to the Ministry of Petroleum on 2 March 2026, emphasized the necessity of strengthening the energy production and distribution chain and making precise forecasts to ensure reliable fuel supply to the people and operational forces across the country. He described the provision of services during this period as “clear examples of sacrifice” and called on managers and employees of executive bodies to be present on the ground with a spirit of jihadist commitment, responsibility, and prudence.

Minister Paknejad also stated during a joint meeting with the Vice-Speakers of Parliament and heads of specialized parliamentary commissions “There is no reason for concern in the area of fuel supply.” He explained that energy sector issues under wartime conditions were reviewed in this meeting, and it was decided that challenges would be resolved through further consultation. Hamid Reza Hajibabaei, the Vice-Speaker of Parliament, also said after the meeting that the reports on the state of the oil industry were encouraging and that the people should rest assured that there would be no issues in the fuel sector.

Ali Nikzad, also at the same meeting, while expressing gratitude for the resilience of the employees of National Iranian Oil Co. (NIOC), National Iranian Gas Co. (NIGC), and National Petrochemical Company (NPC), emphasized that despite enemy attacks, the production of oil, gas, and refined products continues as before. He said that today, both the government and parliament are committed to preserving the system and protecting national interests.

This level of coordination, combined with the on-the-ground presence of managers and swift executive decisions, was precisely what prevented the fuel supply chain from any disruption. In fact, during the days when the enemy had counted on disrupting people’s lives, the synergy among the government, the Ministry of Petroleum, the parliament, operating companies, and the public steered the situation back toward stability.

Sustainability of Fuel Supply Network

During the 40-day war, the country’s fuel supply and distribution network did not go offline despite attacks on some infrastructure, increased demand, and the imposition of temporary restrictions; the supply flow continued without interruption.

The sustainability of this situation rested on a combination of three factors: strategic reserves and pre-designed scenarios, the continued operation of the production and distribution chain, and demand management through tools such as alternative fuels and consumption regulation.

Resilience under Fire

How Petchem Sector Managed Wartime Crisis

Striking energy infrastructure is one of the first options in any war—an attempt to undermine economic capacity and exert psychological pressure on governments. During the forty-day Ramadan War, which began on February 28 with attacks by the United States and the Zionist regime on Iran, the country’s oil and petrochemical industry was also put to such test. 

Assaluyeh, Mahshahr, Tabriz, and Shiraz came under fire at various points, but the key issue this time was not the extent of the damage, rather it was the crisis management approach and the industry’s speed of response. As past incidents have shown, the rapid performance is the result of years of experience, structural development, and investment in safety.

Rag Sefid, Starting Point

The incident at Well 147 of the Rag Sefid oil field in Khuzestan on October 29, 2017 was not just an accident—it was a turning point in the crisis management history of Iran’s oil industry. A malfunction in one of the safety valves and a loss of pressure control at the rig led to a gas blowout and fire, and moments later, Rig No. 95 of National Iranian Drilling Co. (NIDC) was completely destroyed. 

Within a 30-meter radius of the wellhead, temperatures reached approximately 700 degrees Celsius, noise pollution rose to 180 decibels, and the environment was filled with hydrogen sulfide gas. Containing the well under such conditions took 58 days, challenging the technical and managerial capacity of the industry.

Under the leadership of the Ministry of Petroleum and in close cooperation with National Iranian South Oil Co. (NISOC) and NIDC, the fire was finally brought under control. The outcome of this difficult operation was the formation of a new model of crisis command: the creation of rapid response teams, the development of field protocols, and the training of personnel for simultaneous operations under high-temperature and unpredictable pressure conditions. Rag Sefid effectively became a large classroom for crisis containment in the field.

Bu Ali Sina, Crisis Containment

In July 2016, the fire incident at the Bu Ali Sina Petrochemical Plant in Mahshahr made the petrochemical industry face a new reality. The fire started due to a leakage in the inlet pipeline of one of the pumps near the paraxylene unit tower, and following an explosion in the tower, two large storage tanks containing naphtha also went on fire.

The containment operation lasted three days, with safety teams focusing all their efforts on preventing the fire from spreading to adjacent units. Bu Ali Sina reminded the petrochemical industry that in such complexes, every minute of delay means the escalation of a crisis. In the aftermath of the incident, firefighting equipment was revised, foam reserves were increased, and the risk management system was reformed.

The Bu Ali Sina facility incident was effectively the first spark in the formation of advanced crisis management structures in the petrochemical sector—from upgrading alarm networks to conducting joint drills to be performed by safety and operational units.

From Incident to Preparedness

The continuation of lessons learned from these incidents steered the oil and petrochemical industry toward proactive crisis management. The formation of rapid response teams in major complexes, the development of real-time monitoring systems for temperature and leaks, the deployment of automatic fire suppression systems, and the conduct of periodic drills gradually reduced initial response times.

Crisis management was no longer just a reaction after an incident—it became a permanent part of the production process.

Ramadan War; Real Test of Resilience

During the Forty-Day Ramadan War, petrochemical infrastructure in Assaluyeh, Mahshahr, Tabriz, and Shiraz was targeted. The prominent point during these attacks was the speed of operational measures, the immediate presence of senior managers at the incident sites, and the field command of decision-making.

In the attack on the Tabriz petrochemical plant on 30March 2026, safety and firefighting teams were on site within the first few minutes, and the fire was brought under control by the early morning of the same day. The complex’s official announcement stated that the situation was completely under control and that no casualties had occurred.

On April 4, the Mahshahr Petrochemical Special Economic Zone was targeted. National Petrochemical Company (NPC) announced within the first few hours that safety and relief teams were on site and the fire had been brought under control.

In the following days, attacks on Assaluyeh and then on the Amir Kabir Petrochemical Plant were repeated. In each case, the responses were similar: rapid deployment of operational units, coordination between industrial and safety teams, and an official announcement of controlled conditions just hours after the incident occurred.

In all of these instances, senior managers of the facilities personally appeared at the incident sites. Crisis command meetings were not held at headquarters offices but took place in the heart of the incident alongside the personnel. The on-the-ground presence enabled crisis management to proceed with high speed and coordination.

Past Experiences

What was seen during the incidents of the Ramadan War was the result of years of learning and accumulated experience. From Rag Sefid to Bu Ali Sina, operational lessons were transformed into protocols, drills, and structures.

The use of real-time monitoring systems, rapid detection of leakages and fires, and coordination between industrial firefighting and crisis management have not only reduced response times today, but have also significantly increased safety levels.

In major complexes such as Assaluyeh and Mahshahr, the density of production units is so high that the smallest incident could trigger a wave of damage. Yet during the Ramadan War, these incidents—even under peak operational pressure—remained within controlled limits. That was the outcome of the structure, training, and experience built up over previous years.

Stuck in Memory

Reviewing the three main phases—Rag Sefid, Bu Ali Sina, and the Ramadan War—provides a clear picture of the evolution of safety systems and crisis management in Iran’s energy industry. From the lengthy operation to contain the Rag Sefid well to the three-day containment at Bu Ali Sina, and finally the rapid fire control within the early hours of the Ramadan War, the path of transformation is evident: reduced response time, increased coordination, and on-site presence of managers at the moment of decision-making.

This transformation is the result of years of effort, investment in safety infrastructure, workforce training, and the strengthening of a safety-oriented organizational culture. Today, crisis management in Iran’s oil industry is no longer an executive unit but has become a strategic domain and a part of the memory and identity of the industry—a memory that, in difficult moments, guarantees production stability and national resilience.

Wartime Petchem Value Chain Regulation

In an environment where the strategic region of the Persian Gulf remains under the heavy shadow of geopolitical tensions and the military instabilities caused by the imposed Forty-Day War, economic-industrial decisions take on not merely commercial dimensions but also complex strategic and security implications. The imposition of an export ban on a portion of Iran’s chemical, polymer, and petrochemical products is a clear example of such multifaceted decision-making, which cannot be analyzed simply within the framework of a routine commercial directive or a short-term economic reaction. This action, in fact, serves as evidence of a broader recalibration of Iran’s petrochemical value chain—a recalibration adopted in response to the new imperatives of energy security, the sustainability of domestic production, and market crisis management under wartime emergency conditions.

Driver of Growth and Income Generator

To understand the depth and significance of the recent decisions, it is first necessary to analyze the unparalleled position of the petrochemical industry in Iran’s economy. Over recent decades, this industry has become one of the main engines of economic growth and one of the vital pillars of the country’s gross domestic product (GDP). Beyond its direct role in production and value creation, the petrochemical sector plays a fundamental part in non-oil exports and in supplying foreign currency to the country, a role whose strategic importance has been even more underscored, especially during periods of oil sanctions.

According to official statistics, the production capacity of Iran’s petrochemical industry had reached approximately 100 million tonnes (mt) by the end of last calendar year (ended on 20 March 2026). The figure represents a remarkable leap, and with future planning, it is set to increase to 131.5 mt by the end of the Seventh Five-Year Development Plan. Hamid Reza Ajami, investment director of National Petrochemical Co. (NPC), has emphasized that the industry accounts for 7 to 8% of GDP. Approximately 30% of Iran’s total non-oil exports supplied by petrochemical products. These numbers clearly indicate the central role of the petrochemical sector in the country’s trade balance and economic resilience.

To understand the depth of the industry’s transformation, it is enough to look at the historical trend of its exports. Comparing petrochemical product export statistics from 1978 to 2025 reveals a staggering growth of over 41 times. In 1978, Iran's petrochemical exports stood at a meager 0.6 mt, whereas this figure increased to 24.7 mt in the first nine months of last calendar year (ended on 20 March 2026). This massive leap reflects a fundamental transformation in the nature of this industry—an industry that, before the 1979 Islamic Revolution, was primarily a consumer, but over recent years has become one of the most important exporters of petrochemical products in the region and the world. The metamorphosis is the result of enormous investments, localized knowhow, and strategic support from the government and parliament for this vital sector.

Infrastructure Damage

War and its direct consequences on the country’s petrochemical infrastructure. This war, accompanied by extensive military attacks, targeted several Iranian petrochemical complexes in key regions such as Mahshahr, Assaluyeh, Tabriz, and Marvdasht.

These attacks sounded a severe alarm for the security of the domestic supply chain. Given the vital role of petrochemical products in supplying raw materials for a wide range of downstream industries—from packaging and textiles to pharmaceuticals and agriculture—any prolonged disruption in production could have led to severe shortages of raw materials, uncontrolled price hikes, and unrest in the domestic market. Under such circumstances, the need to accelerate the processes of maintaining production, rapidly reconstructing damaged units, and, above all, ensuring a stable supply of petrochemical raw materials for the domestic market, received growing attention.

Exports Banned

In the wake of these emergency conditions and with the aim of crisis management, the Trade Promotion Organization of Iran (TPO), citing paragraph 15 of Addendum No. 3 of the National Economic Resilience and Civil Defense Package, notified the Islamic Republic of Iran Customs Administration of a ban on the export of certain chemical, polymer, and petrochemical products. The directive declared the export of key products such as sulfonic acid (LABSA), polyethylene compound, polypropylene compound, polyvinyl chloride compound, and preform as prohibited until further notice.

The selection of these products for export bans was not a random decision. These materials are primarily situated in the midstream and downstream segments of the petrochemical value chain, and due to their high-consumption nature and widespread use in domestic industries, ensuring their supply holds particular strategic importance. The text of the announcement clearly indicates that this ban has been imposed despite the imposed wartime conditions and the necessity of ensuring the availability of raw materials for downstream industries. This move is a strong signal of a recalibration of the country’s industrial policy in one of the most productive sectors of Iran’s economy—the petrochemical industry; a sector that plays a key role in generating foreign currency, creating employment, and meeting the needs of downstream industries. In effect, with this proactive measure, domestic needs have been prioritized in decision-making in order to keep the market conditions stable and calm during the crisis.

NPC Initiatives

Immediately following the attacks, NPC initiated a series of coordinated and comprehensive measures to manage the crisis and ensure the stability of the domestic market. Chief among the most significant measures was convening a meeting of the “Working Group for Coordinating the Supply of Raw Materials for Downstream Industries.” In this strategic meeting, with an understanding of the country’s special circumstances, it was decided that a portion of the domestic demand for petrochemical products used as raw materials for downstream industries would be met through emergency and targeted imports. The decision served as a complementary approach to the export ban, ensuring that while preventing the outflow of materials, potential shortages would be addressed through alternative channels.

To support domestic industries, a special working group was formed to coordinate and facilitate the import process. This working group,

comprising representatives from the Central Bank, the Ministry of Industry, Mine and Trade, NPC, and the Petrochemical Industry Employers’ Association, was tasked with removing bureaucratic obstacles and accelerating the processes of foreign currency allocation and goods clearance.

Accordingly, it was decided that the capabilities and capacities of petrochemical companies would be leveraged for imports aimed at meeting domestic needs. This meant that major petrochemical companies, utilizing their networks and purchasing power, would assume responsibility for supplying a portion of the country’s requirements.

Mohammad Mottaqi, director of Downstream Industries Development at NPC, emphasized the need to accelerate the reconstruction process of petrochemical complexes and to bring back online the units that have faced reduced operational capacity. He stated “To secure raw materials in the shortest possible time and prevent problems for the people, we are cooperating with the Central Bank and the Iran Mercantile Exchange in this effort.” He also referred to technical preparations for “revitalization and reconstruction” of the damaged petrochemical facilities so that they can compensate for the lost capacity.

The totality of the measures taken by the government and parliament, along with the strategic decisions of NPC, all point to a unified approach: crisis control, sustainable supply of raw materials, and maintaining stability in the domestic market under unprecedented wartime conditions.

Balance During Crisis

The policy of restricting exports of certain petrochemical products should be analyzed within the clear logic of “domestic market management and preventing shortages.” In a situation where the country was facing an imposed war and damage to petrochemical infrastructure, this measure was able to pursue several critical objectives:

Preventing shortages of raw materials: By halting exports, the volume of raw materials available within the country was preserved for use by domestic industries.

Controlling prices in the consumer market: Preventing shortages helped stabilize prices in the domestic market and avoided inflationary shocks.

Directing raw materials toward the production of high-value-added products: In crisis conditions, prioritizing the use of raw materials for the production of strategic goods or products with higher value-added may help meet the country’s essential needs.

This decision was, in fact, part of a broader approach to managing the value chain and prioritizing domestic needs during a crisis. This approach contrasts with the normal logic of free trade and maximizing export profits, but under wartime conditions, it is considered a strategic necessity.

Sustained Supply

One of the most important points in analyzing the current state of Iran’s petrochemical industry is the absence of serious and sustained disruption in production, despite the tense regional conditions and military attacks. Even in the face of external pressures, sanctions, and damage to some infrastructure, the flow of production at major complexes has been maintained. This demonstrates:

- Proof of local engineering prowess and technical knowledge: The ability of Iranian specialists in repair, maintenance, and, when necessary, rapid reconstruction of units.

- Operational flexibility: The capability of complexes to alter production patterns or utilize alternative capacities.

- Risk management: The existence of emergency plans to deal with unforeseen circumstances.

Reports from petrochemical complexes indicate that the reconstruction process began from the very first days of the war. Despite the severe wartime challenges facing the country, managers and employees of the petrochemical industry prevented severe disruption in the supply of production. This reflects a high level of resilience in this industry, which may strengthen its position in the national economy and provide long-term reassurance to domestic investors.

Comprehensive Strategy

The export ban on a portion of Iran’s chemical and polymer products should be assessed within the framework of a comprehensive and overarching strategy for resource management, maintaining economic balance, and ensuring national security. This decision was made at a time when the country was facing multi-layered economic, security, and geopolitical pressures, and the necessity of protecting the domestic market and meeting the basic needs of the people was felt more than ever.

At the same time, evidence shows that Iran’s petrochemical industry has managed to prevent severe disruption in the supply of petrochemical products by maintaining production levels, initiating the reconstruction process, adopting a complementary policy of importing essential materials, and actively managing the domestic market. This is not merely an operational success; it represents a successful model of industrial crisis management that may inspire other economic sectors of the country.

The experience of the forty-day war and its aftermath once again underscores that the petrochemical industry, beyond being an economic sector, is a crucial stronghold against threats and a guarantor of national resilience.

Three Global Shocks

Quantitative Assessment of Demand, Investment, and Transition Dynamics

Afshin Javan

Energy Economist & Senior Strategic Advisor

Abstract

Since 2019, the global energy system has undergone a profound structural transformation driven by three major shocks: the COVID-19 pandemic, the Russia–Ukraine war, and escalating geopolitical tensions in the Middle East. These events have reshaped not only short-term supply-demand dynamics but also the strategic logic of energy investment, energy security, and global power distribution.

The present report aims to develop a quantitative and conceptual framework to assess these changes through two key indicators: the Investment Transition Ratio (renewable investment relative to oil and gas investment) and the Demand Transition Ratio (renewable energy demand relative to oil demand). The analysis demonstrates that the global energy system is transitioning from a fossil-fuel-dominated structure toward a more diversified, electrified, and risk-aware paradigm.

The findings suggest that energy hegemony is no longer determined solely by control over hydrocarbon reserves and transport routes. Instead, it increasingly depends on technological capability, renewable deployment, grid infrastructure, energy storage, and supply-chain resilience. The three shocks since 2019 have accelerated this transition and redefined the relationship between energy security and energy transition.

Introduction

Before 2019, the global energy system was evolving gradually toward decarbonization. Renewable energy was expanding, but fossil fuels, especially oil and gas, remained dominant in both investment and consumption. Energy policy was largely framed around efficiency, cost optimization, and climate objectives.

The period after 2019 represents a clear structural break. The convergence of three major shocks has fundamentally altered the trajectory of the energy system. The COVID-19 pandemic exposed the vulnerability of oil demand to mobility disruptions. The Russia–Ukraine tension transformed energy security into a central policy priority. Rising tensions in the Middle East reintroduced geopolitical risk as a critical factor in energy markets.

These shocks collectively accelerated a shift from a cost-driven energy model to a resilience-driven model. Governments and investors now prioritize diversification, domestic capacity, and risk mitigation alongside economic efficiency. As a result, energy transition is no longer solely an environmental objective but also a strategic imperative.

The present report evaluates this transformation using a quantitative framework based on investment and demand dynamics. It highlights the divergence between capital allocation and energy consumption and explains how this divergence is reshaping global energy power.

Methodological Framework

The analysis relies on two central indicators.

The Investment Transition Ratio (ITR) measures the relative scale of renewable investment compared to oil and gas investment. A rising ratio indicates a structural shift in capital allocation toward clean energy technologies.

The Demand Transition Ratio (DTR) compares renewable energy consumption with oil demand. This ratio captures the transformation of actual energy use, which tends to evolve more slowly due to infrastructure inertia.

The divergence between these two ratios is essential. Investment responds quickly to policy, technology, and risk perceptions, while demand adjusts gradually due to long asset lifetimes and system constraints. This creates a lagged transition dynamic in which current investment decisions shape future energy systems.

The framework uses historical data for 2000–2025 and scenario-based projections for 2026–2030. Three scenarios are considered: baseline transition, accelerated transition, and delayed transition. This approach reflects the uncertainty of the current energy landscape and avoids overreliance on a single forecast.

COVID-19: Demand Shock and Structural Vulnerability

The COVID-19 pandemic represented an unprecedented demand shock. Global mobility collapsed, industrial activity declined, and oil demand fell sharply. The temporary emergence of negative oil prices highlighted the physical and logistical constraints of oil markets.

This shock revealed the concentration risk of oil demand. Transport accounts for a significant share of oil consumption, making it highly sensitive to disruptions in mobility. In contrast, electricity demand declined less dramatically, and renewable generation remained relatively resilient.

The pandemic also triggered a reassessment of investment strategies. Oil and gas companies reduced capital expenditures (CAPEX) and delayed projects, while renewable energy continued to attract policy support and investment. This divergence marked the beginning of a structural shift in capital allocation.

Beyond its immediate effects, COVID-19 changed the perception of energy-system stability. It demonstrated that fossil-fuel demand is not immune to sudden shocks and reinforced the importance of diversification and flexibility in energy planning.

Russia-Ukraine Tensions

The Russia-Ukraine tension introduced a major supply shock, particularly in natural gas markets. Disruptions in pipeline flows, rising LNG demand, and extreme price volatility forced governments to reconsider energy dependency as a strategic risk.

The shock fundamentally altered the role of energy security in policy-making. Renewable energy, previously viewed primarily as a climate solution, became a tool for reducing reliance on imported fuels. Investments in renewables, storage, and grid infrastructure were increasingly framed as measures to enhance national resilience.

At the same time, the crisis led to short-term rises in fossil-fuel investment, particularly in LNG infrastructure. This dual response illustrates a key feature of the current transition: short-term security needs may reinforce long-term transition objectives.

The war also highlighted the macroeconomic impact of energy markets. High energy prices contributed to inflation, reduced industrial competitiveness, and increased fiscal pressures. This reinforced the need for energy systems that are not only sustainable but also stable and affordable.

Middle East Tensions

Recent tensions in the Middle East have underscored the persistent importance of oil geopolitics. The Strait of Hormuz remains a critical chokepoint for global oil flows, and any disruption may significantly affect market stability.

These tensions increase the risk premium associated with fossil fuels. Even without physical disruptions, uncertainty may raise shipping costs, insurance rates, and price volatility. This reinforces the vulnerability of fuel-based energy systems to geopolitical shocks.

At the same time, these risks enhance the strategic value of alternative energy systems. Renewable energy and electrification reduce dependence on imported fuels and exposure to external disruptions. As a result, geopolitical instability indirectly accelerates the energy transition by increasing the relative attractiveness of domestic and decentralized energy sources.

Investment Dynamics

The most significant transformation since 2019 is the shift in energy investment. Renewable energy investment has grown rapidly, surpassing oil and gas investment in recent years.

This shift reflects several factors: declining technology costs, stronger policy support, increased investor confidence, and heightened awareness of energy-security risks. Clean energy is increasingly viewed as both an economic opportunity and a strategic necessity.

By 2025, renewable investment was estimated to be roughly twice that of oil and gas. This indicates a fundamental change in the direction of capital flows. The energy system of the future is being shaped by today’s investment decisions, and these decisions increasingly favor clean technologies.

Looking ahead to 2030, all scenarios suggest constant dominance of renewable investment. Even in a delayed transition scenario, where fossil-fuel investment temporarily increases, clean energy remains the primary destination for new capital.

Demand Dynamics

While investment has shifted rapidly, energy demand changes more slowly. Oil remains a dominant energy source, particularly in sectors with limited alternatives, such as aviation, shipping, and petrochemicals.

However, the growth dynamics are changing. Renewable energy demand is increasing faster than oil demand, driven by electrification, renewable capacity expansion, and efficiency improvements. This leads to a gradual increase in the demand transition ratio.

The key insight is that the energy transition is driven by marginal change. Fossil fuels may remain significant in absolute terms, but their share of incremental demand declines over time. This gradual shift has important implications for long-term energy planning and investment strategies.

Scenario Outlook: 2026-2030

The future trajectory of the energy system depends on policy, technology, and geopolitical developments. The scenario analysis highlights three possible pathways.

In the baseline scenario, the transition continues at a steady pace, with moderate growth in renewables and stable oil demand. In the accelerated scenario, stronger policy support and technological progress lead to faster electrification and declining oil demand. In the delayed scenario, geopolitical risks temporarily increase fossil-fuel investment, but renewables continue to grow.

Across all scenarios, renewable investment remains dominant. The demand transition progresses more slowly but remains positive. This suggests that the direction of change is robust, even if the speed varies.

Redefining Energy Hegemony

The transformation of the energy system is redefining global power structures. Traditionally, energy hegemony was based on control over fossil-fuel resources, production capacity, and transport routes.

In the emerging system, power increasingly depends on technological capability and system integration. Key elements include renewable-energy manufacturing, grid infrastructure, energy storage, and access to critical minerals.

This shift represents a move from resource-based power to system-based power. Countries that lead in clean-energy technologies and infrastructure are likely to gain strategic advantages, even if they lack large fossil-fuel reserves.

At the same time, new dependencies are emerging. Supply chains for critical minerals and clean-energy technologies introduce new geopolitical risks. The energy transition does not eliminate geopolitics; it transforms its structure.

Policy and Investment Implications

For governments, the main implication is the need for integrated energy strategies. Energy policy must balance security, affordability, sustainability, and competitiveness. This requires investment in infrastructure, diversification of supply, and support for technological innovation.

For investors, the key challenge is managing uncertainty. Energy investments must be evaluated across multiple scenarios, considering both short-term risks and long-term structural trends. Assets that enhance resilience may offer strategic value beyond their immediate financial returns.

For global energy markets, the transition implies greater complexity. Price formation increasingly reflects not only supply and demand but also geopolitical risk, policy interventions, and technological change.

Conclusion

The three global shocks since 2019 have fundamentally reshaped the energy system. They have accelerated investment in clean energy, highlighted the importance of energy security, and increased the role of geopolitical risk.

The transition is characterized by a divergence between investment and demand. Capital allocation is shifting rapidly toward renewables, while demand adjusts more gradually. This creates a dynamic in which future energy systems are being built even as current systems remain in place.

The most important transformation is the redefinition of energy hegemony. Power is shifting from control over fossil-fuel resources to control over energy systems, technologies, and supply chains.

In this new paradigm, resilience, flexibility, and innovation are as important as resource availability. The energy system of the future will not be defined solely by what fuels are used, but by how energy is produced, distributed, and managed in an increasingly complex and uncertain world.

Trump China Visit, Strategic Failure over Iran Oil and Hormuz Strait

Introduction

The highly controversial yet hopeful visit of  the US President Donald Trump to China in May turned into one of the most significant diplomatic events in the international system, which was expected to be a turning point in tense dossiers, including the Iran-related issues. However, contrary to the White House’s initial forecasts, the outcomes of this visit demonstrated failure and a deep stalemate, reflecting fundamental changes and structural shocks in the global order.

As US media assessed after Trump’s return, his trip to Beijing was deemed a failure across five key areas: Iran, Taiwan, trade tariffs, artificial intelligence (AI), and the Boeing contract. The failure to reach agreements in these areas demonstrated that the United States, facing a new global power bloc, was left with no choice but to accept a competitive, quid-pro-quo dynamic - and even retreat on some positions. Among these, the issue of Iran and Trump’s unsuccessful efforts on two fronts - namely, getting China to cut or reduce its oil purchases from Iran and aligning Beijing with the US regarding the Strait of Hormuz - stood out more than the others do.

China Seeks Iran Oil

As the world’s second-largest economy and the largest importer of crude oil, the People’s Republic of China has a deep structural dependence on energy resources from the Middle East. Among these suppliers, Iran is considered one of China’s key oil providers. From Washington’s perspective, cutting off China’s oil purchases from Iran could help materialize two strategic objectives:

1. Weakening Iran’s economy and increasing pressure on Tehran to surrender in the conflict and accept the US’s imposed terms and conditions in negotiations;

2. Demonstrating America’s hegemonic power and highlighting Washington’s ability to shape the behavior of major powers.

Evidence of Failure

Contrary to forecasts of China’s possible deal with the US over Iran, President Trump won no specific concessions from President Xi Jinping over Iran. Some reasons confirming such failure are as follows:

First, in his joint news conference with his Chinese counterpart, President Trump acknowledged that President Xi had insisted on China’s continued oil purchase from Iran. In the diplomatic language, such open admission would mean failure in negotiations. In diplomatic protocols, when the leader of a state highlights before cameras an unfavorable position from the other party, it would imply that no agreement has been reached.

Second, the Chinese silence during Trump’s state visit about issues pertaining to Iran carried a diplomatically strong message. In international diplomacy, silence speaks louder than words. By adopting absolute silence about Iran, Beijing sent a clear message that it would not compromise with the US over Iran.

Third, immediately after Trump’s return to Washington, Beijing expressed its positions clearly and decisively:

1. Emphasized China’s opposition to the US war of aggression against Iran.
2. Emphasized Iran’s right to the peaceful use of nuclear energy.

Fourth, from an economic perspective, China did not give any commitment to reduce its oil imports from Iran. In fact, trade data shows that China’s oil imports from Iran not only did not decrease, but during the very period of Trump’s presence in China, it increased, with a significant rise in the movement of Chinese oil tankers through the Strait of Hormuz.

Strait of Hormuz Issue

Undoubtedly, during Trump’s state visit to China, Washington sought to bring Beijing on board with taking a stance against Iran regarding the Strait of Hormuz. This effort was part of the broader US strategy for a naval blockade of Iran and exerting maximum pressure on Tehran.

However, China in no way showed alignment with the US strategy concerning the Strait of Hormuz. The most important and definitive evidence of Trump’s failure in this regard was China’s explicit opposition to the anti-Iranian draft resolution at the United Nations Security Council. This resolution, submitted by Bahrain (on behalf of certain Arab countries) and supported by the US, portrayed Iran as a threat to the security of the Strait of Hormuz and called for restrictive measures against Tehran.

China’s decisive message regarding its refusal to align with the proposed Bahraini-American resolution contained several important points:

1. China does not consider Iran a threat to the Strait of Hormuz, nor does it accept the American narrative of an “Iranian threat.” This position directly neutralized Washington’s effort to label Iran as a “regional destabilizer.”
2. Through this opposition, China clearly stated that it is not willing to participate in the US project to contain Iran. This was a clear red line: America may pursue any policy it wishes toward Iran, but it cannot expect China to play a role in implementing it.

Trump Nuclear Headache

One of the key objectives of Trump’s state visit to China was to win Beijing’s support for ratcheting up the pressure on Iran and restrict Sino-Iranian oil and economic interactions. However, China expressed in clear terms it would not get along with the US on this issue. Trump’s direct acknowledge of his Chinese counterpart’s insistence on continuing to buy Iranian oil represented the most outstanding indicator of China’s position.

Furthermore, while preventing any public stance on Iran during the trip, China, after Trump’s return, twice declared loudly its opposition to a potential US war of aggression against Iran and emphasized Iran’s right to the peaceful use of nuclear energy. These positions demonstrate the depth of the differences in interests and approaches between Beijing and Washington on regional and global issues, and indicate China’s unwillingness to submit to American pressure.

This was while Trump’s strategy of maximum pressure and naval blockade required the cooperation of China as the largest buyer of Iranian oil. However, Beijing not only refused to cooperate, but also openly stated that it would continue purchasing oil from Iran. From the perspective of game theory and structural realism, China’s behavior is entirely explicable. Because China knew, that Washington was seeking to prove its hegemony more than it was seeking to cut off Iran’s oil. Therefore, making concessions in this area would not only yield no gains for China, but would also create a strategic debt without receiving any concession from the US in return.

Furthermore, purchasing Iranian oil is a vital interest for China, not a negotiable benefit. At the same time, because China holds the US and Zionist Regime responsible for military aggression against Iran, it considers the current situation in the Strait of Hormuz to be the result of this same aggressive policy. Consequently, from China’s perspective, the obstruction in the Strait of Hormuz has arisen due to America’s aggressive policies.

Trump’s failure during his state visit to China, particularly regarding the issue of Iran, demonstrates that the US no longer possesses the power to build strategic consensus at the macro level. To the extent that not only China and Russia, but even European countries, are unwilling to align with the US neither in a war against Iran nor regarding the Strait of Hormuz.

A Story of Oil

Mideast Geopolitics Emerges from MIS Petroleum

Elahe Baqeri Sanjarie

One hundred and seventeen years ago, on 26 May 1908, it was in No. 1 Neighborhood in the center of Masjed Soleyman (MIS) that oil - this turbulent black gold - made its entrance. The name of that neighborhood became tied to Well No. 1, the very first oil well in Iran and the Middle East. This day, perhaps designated in history and calendars, as the “Anniversary of the Discovery of Petroleum in Iran,” marked the beginning of a new, and perhaps perilous, chapter for the residents of No. 1 Neighborhood, the residents of MIS, and on a broader scale, for all the Iranians and Middle East nations.

Foreigners Get Hand on Iran Oil

It was 28 May1901, when Mozaffar al-Din Shah, at the Sahebqaraniyeh Palace in Tehran, signed a contract granting William Knox D’Arcy, an Englishman, a 60-year concession for the exploitation of Iran’s oil reserves. This concession opened the door for oil prospectors and drillers to the west and south of the country. By 1904, drilling operations had begun in the Chia Sorkh region near Qasr-e Shirin. However, the amount of oil extracted from the reservoir was not economically viable, so operation halted and the drilling team moved toward Ramhormoz. Drilling there also proved unsuccessful, and eventually, drilling reached the Maydan-e Naftun field in MIS. By then, D’Arcy had also disappointed the Concessions Syndicate, which had been established in 1905 to secure the required capital for exploration and drilling operation. Perhaps even he himself had become desperate about discovering oil in Iran.

However, precisely at the height of the British investors’ despair over the prolonged drilling period, finally at 4 a.m. on 26 May 1908, the drilling team split the earth to a diameter of 300 meters. After the final blow to the massive cap rock that lay above the oil reservoir, oil gushed from a depth of 360 meters with such immense pressure that it shot up 15 meters into the sky, drenching the workers in this black liquid. This foul-smelling black liquid opened a new and prosperous chapter in Iran’s history and placed the country on the list of the world’s oil-rich nations. The event led to a daily extraction of 36,000 liters and transformed the social history of MIS, and consequently, that of Iran as a whole. After that, the number of oil wells drilled increased on a daily basis until it reached 300 wells.

From that moment on, the story of the discovery of oil in Iran, followed by its extraction and export, became the most significant influencing factor on the culture, economy, social issues, and even the history of Iran, especially in the current century. However, we need to look beyond Iran; oil, with its precious black drops, opened the door for many industrial and developed nations to enter the Middle East.

Concessions Awarded to Westerners

In the wake of the overthrow of the Qajar dynasty in 1925, Reza Khan ascended to the throne. The beginning of his reign coincided with the peak of the obstructions by the former D’Arcy Company, later on operating under the name of Anglo-Persian Oil Company (APOC). At that time, the D’Arcy concession ended and replaced by a new contract: the 1933 agreement, which soured the sweetness of the annulment of the D’Arcy concession for the Iranians and was far more disgraceful than the D’Arcy agreement.

It is evident from these historical accounts that from the very beginning, the British government, ahead of other governments, recognized the importance and value of Middle Eastern oil. To secure its dominance over it, Britain acquired the majority of shares in APOC and used every opportunity to strengthen the company’s position and to advance its objectives. To the extent that by 1930, all the oil produced in the Middle East was exclusively under British control.

The American and French governments; however, remained unaware of the true significance of this vast wealth in the Middle East until the First World War-particularly the United States, which at the outset was considered nearly the world’s sole oil producer.

Sabre-Rattling in Oil Field

After World War I, the situation changed, and the value of oil became more apparent than ever to the governments that involved in the war. Thus, immediately after the battlefields, they turned to conflict and rivalry over oil - under the banner of preventing the dominance of profiteers and monopolists and liberating the nations of the Middle East.

However, the reality was that the United States and France did not want to be left behind in the competition with Britain, which had gained dominance over the boundless oil resources of the Middle East. Although their efforts to secure concessions from the region’s oil date back to 1920, it was around the 1950s that their attention to Middle Eastern oil led to their influence in the region. During those years, the Americans managed to obtain a quarter of Iraq’s oil, all of Bahrain’s oil, all of Saudi Arabia’s oil, half of Kuwait’s oil, and forty percent of Iran’s oil from the Consortium agreement. The position of the French, though modest compared to the Americans, gained great importance after the French oil company secured a quarter of Iraq’s oil.

In coincidence with the growing attention of the Americans and French to Middle Eastern oil, Iran also witnessed very significant developments in its petroleum industry.

Modern Colonialism

On 25 January1949, a plan to annul the 1933 Iran-Britain agreement and to nationalize the oil industry was proposed in the 15^th National Consultative Assembly. At that time, clerics and various segments of society supported this plan by holding gatherings and demanded the nationalization of oil. Ultimately, Iran’s oil was nationalized on 20March 1951, without a single dissenting vote in the parliament.

The Iranians had not yet fully savored the pleasure of this nationalization when the coup d’état of 19 August 1953, once again upended all equations. According to evidences and indications, once again the enormous oil interests and resources had opened the door to profiteering and hostilities against Iran.

Just a few months later the coup d’état of 19 August 1953, the Americans arrived on the scene of modern colonialism in Iran. On 29 October1954, Mohammad Reza Pahlavi signed the oil agreement with the Consortium, which had been already ratified by the Senate. Thus, Iran’s oil, which before nationalization had been monopolized by Britain, was placed for 25 years in the hands of a consortium of major Western oil companies, including American and British firms, which were partners.

The day after the signing the agreement, on 30 October 1954, the first tanker belonging to the consortium of Western countries was loaded in Abadan. That day might be considered the beginning of a new era of foreign domination over Iran’s economic resources and immense national wealth, this time led by the United States.

Mideast Wars for Oil Seizure

The tensions, in which oil played the starring role, were not limited to Iran alone. Wars constantly broke out in the Middle East that appeared political or military on the surface, but secretly revolved around oil. One example of this was the Six-Day War of 1967, during which the Zionist Regime attacked the borders of Arab countries (including Egypt, Syria, and Jordan) under the pretext of Egypt’s closure of the Straits of Tiran or the Gulf of Aqaba.

Shortly after those events, on 26 January 1973, Mohammad Reza Pahlavi admitted the weaknesses of the Consortium Agreement and called for its revision. Toward the end of that same year, Arab countries were preparing to attack the Zionist Regime. Meanwhile, OPEC was insisting on increasing the price of oil. Around this time, Mohammad Reza Pahlavi began negotiations with the Consortium companies to amend the terms of the agreement. In August 1973, a bill to annul the Consortium agreement and establish a new contract was introduced to Parliament by Amir Abbas Hoveyda, the then prime minister, and was approved. Thus, the Consortium Agreement was annulled on 1 August 1973, by virtue of the law entitled “Agreement on the Annulment of the Oil Contract with the Consortium Approved in 1954 and Permission to Implement the Oil Sale and Purchase Agreement between the Imperial Government of Iran and Foreign Companies.” Then it was replaced by a new oil sales and purchase agreement between Iran and the Consortium for an additional twenty years.

Threats and Embargoes

After a short time, Iranian oil experts, under the terms of the new agreement, were in the process of organizing a new oil company named OSCO (Oil Service Company of Iran) when the flames of war engulfed the Middle East. The Arab - Zionist Regime war in October 1973 changed the political conditions of the region. At that time, the Middle East, as the world’s major epicenter of oil production, had become insecure due to the outbreak of the war. The Arab countries of the region threatened a

global oil embargo, while on the other side, the United States, as the primary purchaser of oil from the Middle East, considered itself committed to supporting the Zionist Regime against the oil-rich Arabs. The US attempted to put the Arabs under pressure through a package of economic policies, including an embargo on oil imports from the Middle East. The result of export restrictions by the producing countries and the import embargo by the United States was a rise in oil prices on global markets—in fact, the beginning of a fourfold increase in the price of oil globally: from about $3 to $12 per barrel. The event became known as the “oil shock”.

Oil and 1979 Revolution

Oil, the black gold and immense blessing, had now become the main actor in the political and economic tensions of the Middle East and even the world. Shortly after the oil crises in the Middle East, the impact of global oil price fluctuations in the years leading up to the 1979 Islamic Revolution, became evident. In the years preceding the Revolution, rising inflation rates, the disruption of the demographic balance between city and countryside, consumerism, and neglect of non-oil exports led to social tensions and protests among the urban middle class in Iran. Furthermore, workers in the oil industry, during the social tensions and revolutionary protests, sided with the people against the then regime of Iran. Therefore, oil was considered one of the main actors in the 1979 Revolution.

After the Islamic Revolution, another game began against Iran’s oil. In 1979, following oil sanctions imposed by the United States and Western countries, oil exports fell by 50%, reaching about 2.8 mb/d—a figure that dropped sharply during the years of the imposed war against Iran. The war began at a time when Iran’s economy, which before the revolution had been heavily dependent on oil revenues, was on the verge of implementing programs aimed at self-sufficiency and reducing oil dependence to transform the economy. As a result, Iran’s enemies, who had been unable to defeat Iran militarily, decided to strike at Iran’s economic capacities. Therefore, from the very beginning of the aggression, oil facilities and Iran’s oil capacity became major targets for them.

Export Restrictions

The attacks on the facilities were not enough for their purposes, and ultimately, Kharg Island—the beating heart of Iran’s oil exports—became the main battlefield, and the Tanker War began. Between 1984 and 1988, over 250 Iranian and foreign tankers were attacked in the waters of the Persian Gulf. In fact, the operation aimed at restricting Iran’s oil exports to pressure the government of the Islamic Republic of Iran.

In Africa as well, oil was a primary driver of conflict. The Nigerian war of the 1990s in the Delta region is a clear instance, during which local armed uprisings emerged to secure a share of oil revenues and protest the unfair distribution of resources, turning Nigeria’s oil delta into an arena of conflict among the local community, the government, and international companies.

Iraq, in 2003, became embroiled in a war directly tied to oil, with one of the main and key objectives of that war being to control and exert influence over Iraq’s vast oil reserves. Another case in point is the Libyan civil war in 2011, where internal rebellions and conflicts focused on seizing oil fields and managing limited exports.

Oil, Geopolitical Tool

Since the day oil was discovered in MIS, the Middle East began a new era. A region that was once the cradle and birthplace of civilization and the site of the emergence of great religions has now, due to its geopolitical importance and the oil flowing beneath its soil, recognized as the center of gravity for international calculations and interactions. This is why throughout contemporary history, we witness wars and conflicts that may appear political or military on the surface, but behind the scenes, their sole objective has been oil resources and transportation routes. Even in the 21^st century, oil remains a direct driver of military actions and the exertion of international pressure. The naval blockade of Venezuela in 2026, aimed at accessing and controlling Caracas’s oil, is an example of that same historical pattern. Much like what occurred in the US- Zionist Regime attacks against Iran and the naval blockade, where energy resources and infrastructure became the enemy’s primary target.

What is evident throughout all these narratives is that oil is far more than a natural resource and an economic commodity. From the very moment its first drops extracted in the Middle East, it became a geopolitical tool. This is why the goal and pattern of wars and conflicts over the past hundred years - from the day D’Arcy set foot in Iran to the present day - have followed the same course: control of resources, transportation routes, and political and economic influence, with oil being the central focus in all of this.