Energy Experts Warn of Broader Impacts from Iran Conflict

Energy experts expressed concerns during a bipartisan event on Thursday, highlighting that a potential war with Iran could significantly disrupt fuel, transportation, and supply chains, even with a peace agreement in place.

The event, organized by Republican Rep. Craig Goldman of Texas and Democratic Rep. Brad Schneider of Illinois, focused on the regional and global ramifications of the closure of the Strait of Hormuz. Dr. Karen Young, a senior research fellow at the Middle East Institute, emphasized that the effects go beyond crude oil alone, impacting jet fuel, diesel, industrial chemicals, and other refined products.

“We are currently witnessing the largest supply shock to the energy market and the oil market in history,” Young stated during the discussions.

She further noted that even in the event of a peace deal between Iran and the U.S., it might take a long time for oil flows to normalize. This would be due to infrastructure damage, reduced stockpiles, transportation risks, and the prolonged process needed to clear mines from waterways.

Young warned that the extensive damage to oil infrastructure in the Middle East could take months or even years to repair, suggesting it will also take considerable time for the U.S. and other nations to replenish their oil stockpiles.

Approximately 20 million barrels of crude oil and refined products usually transit through the Strait of Hormuz, Young noted, while alternative pipeline routes through Saudi Arabia and the UAE are reportedly operating near their limits.

Schneider linked surging gasoline prices to the escalating instability in the Middle East, remarking, “What happens in the Middle East doesn’t stay in the Middle East.”

This cautionary announcement follows varying assessments from the Trump administration regarding the likelihood of resolving the conflict with Iran. President Trump mentioned, “I think there’s a very good chance that we can get an agreement again. If we can’t, we’ll return to the old ways.” However, just a week later, he described the ceasefire proposal as “for life support equipment.”

Conflicts in the Middle East have already strained oil markets and adversely impacted the region’s energy infrastructure. Reports indicate that production in the Gulf has declined by nearly 57% since the start of the conflict. According to Goldman Sachs, around 80 oil production facilities in the region have been attacked or damaged, as reported by the International Energy Agency.