The barrel front: how the Middle East crisis has affected the energy sector

The Middle East accounts for about a quarter of global oil production and almost a third of natural gas production, making the region a key hub for global energy and the global economy. Yesterday, on February 28, the United States and Israel launched strikes against Iran. In response, the Islamic Republic attacked both Israeli territory and American military installations throughout the Middle East — in Bahrain, Qatar, the United Arab Emirates, Kuwait, Saudi Arabia, Jordan and Iraq. Moreover, the Iranian authorities have stated that they consider the assets of American companies in the Middle East as legitimate targets. The consequences of a new wave of conflict can be described in the Izvestia article.

Iran's threats to the assets of American energy companies

After massive strikes on its territory on February 28, Iran surpassed previously observed levels of rhetoric in the region and announced an unprecedented escalation — Tehran officially stated that it considers any assets of American companies in the Middle East as legitimate targets for strikes. This applies primarily to the largest players in the energy sector, whose activities are directly related to the production and transportation of hydrocarbons in the region.

Leading American energy companies, including Chevron and ExxonMobil, were in the zone. Chevron is a key participant in oil and gas projects in Iraq and other countries, while ExxonMobil has stakes in energy projects in the United Arab Emirates and Qatar. In addition, companies providing critical infrastructure, such as KBR and SLB, involved in the energy sector of Kuwait, and large projects in Saudi Arabia, such as the Jafura field, which is of strategic importance to Riyadh and Washington at the same time, fall into the field of possible threats.

Such threats can potentially lead to large-scale economic losses. Thus, the destruction of infrastructure or the suspension of facilities can result in multibillion-dollar losses for corporations, and volatility in the oil and gas markets will increase. International agencies are already recording an increase in uncertainty in the energy markets, which could lead to one of the largest crises in the history of the industry, as the Persian Gulf region remains a fundamental source of global hydrocarbon supplies.

In addition to direct financial risks, a possible blow to the assets of American companies undermines the strategic reputation of the United States as a guarantor of security for foreign investment in the region. Previously, the markets showed an increase in the share prices of energy companies during periods of geopolitical tension, but such dynamics does not exclude the risk of a sharp correction in the event of real attacks on infrastructure.

Political analysts note that the Arab countries of the Persian Gulf, whose own economies are heavily dependent on the stable operation of the energy sector, may increase pressure on Washington and Israel to demand an immediate de-escalation of the conflict. Otherwise, the implementation of Iran's threats could destroy the already shaky regional security architecture and lead to a broader crisis affecting not only energy markets, but also global economic chains.

On high alert: how the Middle East's oil and gas sector works

Despite the sharp escalation around Iran, the largest oil and gas companies continue to operate in the Middle East. At the same time, the industry has actually entered a high-alert mode. Thus, security measures at the facilities have been strengthened, logistics routes are being reviewed, and the governments of the producing countries are consulting with foreign investors.

Iraq remains one of the key areas of activity. American Chevron is negotiating to expand its participation in projects in the south of the country, including a possible connection to the development of the West Qurna-2 field, one of the largest in Iraq. The project provides about 500 thousand barrels of oil per day, and the republic's authorities expect to increase production to 750-800 thousand barrels. For Baghdad, this is part of a larger strategy to bring national production to 6 million barrels per day by the end of the decade. Amid the tension, foreign companies continue to operate, but strengthen security protocols and coordination with the authorities.

ExxonMobil, another major player in the region, has reduced its participation in a number of Iraqi projects in recent years, but retains its position in the Persian Gulf countries and remains an active participant in gas initiatives in Qatar and the UAE. The company continues trading operations and technological cooperation, closely monitoring the risks to the infrastructure.

The service sector also remains resilient. SLB (formerly Schlumberger) implements major contracts in Kuwait, including projects for the development of complex reservoirs at the Mutriba field jointly with Kuwait Oil Company. Such agreements are designed for several years and indicate that the countries of the region are not curtailing long-term programs for the modernization of the oil and gas industry.

Saudi Arabia continues to implement one of the most ambitious gas projects in recent years, the Jafurah field. State-owned Saudi Aramco launched commercial production at the facility at the end of 2025. According to the company's plans, by 2030, the volume of shale gas production here will reach 2 billion cubic feet per day. The project allows Riyadh to replace oil in the domestic energy mix with gas and free up additional volumes of raw materials for export. Despite the growing geopolitical risks, Jafurah and its associated processing facilities are operating normally.

In general, the largest fields in the region in Saudi Arabia, Iraq, the United Arab Emirates and Qatar continue to produce without major stops. Exceptions are of a point-based and temporary nature and, as a rule, are related to the assessment of security threats. At the same time, the producing countries remain in coordination within the framework of the OPEC+ mechanism, which, if necessary, can adjust production volumes to stabilize the market.

If the Islamic Revolutionary Guard Corps carries out its threat and attacks the oil fields of Chevron and other Western companies, this could lead to a sharp reduction in production and a collapse in exports from the Persian Gulf countries, independent industrial expert Leonid Khazanov told Izvestia. This, in turn, will lead to higher prices.

"Now they are moving towards $ 100 per barrel, but [in case of escalation] they can very quickly jump to $ 150-170 per barrel," the source said.

The situation in the Strait of Hormuz, which was blocked by Iran the day before, will also play a significant role. Then the country announced that traffic through the strait had resumed, but American oil tankers remained a "legitimate target" for the country's armed forces.

Israel temporarily suspends operation of gas fields

The Israeli Ministry of Energy, amid threats from Iran, ordered a temporary cessation of production at part of the national gas fields for security reasons. The decision was made based on an ongoing assessment of security threats to key infrastructure, sources and statements from the companies told Reuters.

On the instructions of the authorities, work has been stopped on Leviathan, a large deepwater gas field off the northern coast of the Mediterranean Sea, being developed under the leadership of American Chevron. Under normal conditions, it provides a significant portion of Israel's gas production and supplies products to neighboring countries, including Egypt and Jordan, under long-term export contracts.

In addition, the work of the Energean production vessel, which serves a number of offshore assets, including the Karish field, also located in the Israeli exclusive economic zone, has been temporarily suspended. The company confirmed that it was suspending operations on the instructions of the government as a preventive measure.

The Ministry noted that the country's energy needs will remain met. The electric power sector is prepared to switch to alternative fuels, and backup sources will make it possible to compensate for the temporary shortage of gas, if necessary.

Earlier in June 2025 Israel has already temporarily stopped the work of Leviathan and Karish due to the active phase of the conflict with Iran, leaving only the old Tamar field in operation to meet internal needs. This shutdown then led to a reduction in gas exports, particularly supplies to Egypt, and was one of the first notable reactions of the regional energy sector to military tensions.

At the moment, details on the timing of the resumption of production are not specified, the decision will depend on the assessment of threats from the military and relevant departments. But the current measures indicate that Israel, in coordination with infrastructure operators, is acting cautiously to minimize risks to the energy system and consumers both inside and outside the country.

The impact of the shutdown of Israeli fields on the global energy market

The temporary shutdown of Israel's key gas fields is already having an impact on the energy market and may continue to put pressure on natural gas and oil prices.

International analysts point out that the lack of supplies from Israel affects export chains to Egypt and Jordan, as well as European gas hubs. Rating agencies attribute the price increase to increased uncertainty about supplies from the Eastern Mediterranean. Europe will be forced to purchase more liquefied natural gas (LNG) from spot markets, increasing competition for limited volumes and pushing spot prices up, especially during periods of high demand and limited supply.

Russia, as a major exporter of natural gas, may find itself in a more advantageous position in the pipeline and LNG segment if European gas prices rise. However, it may also encourage European consumers to accelerate supply diversification and switch to alternative sources, which increases long-term competition.

The geopolitical tensions in the Middle East are also reflected in the oil markets. In past flare-ups of the conflict, Brent crude oil prices have risen above $74-75 per barrel due to fears of supply disruptions through key shipping lanes, including the Strait of Hormuz, through which about a quarter of global oil exports pass.

At that time, the International Energy Agency (IEA) warned that despite the relatively balanced state of global markets, the aggravation of the situation could lead to increased price volatility.

— If prices rise, they may "get stuck" at this level for a period of two weeks or two months — everything will depend on further developments, — warns Leonid Khazanov.

In his opinion, this price spike may be particularly sensitive for India, China and the European Union, but one way or another its impact will be felt by the whole world.

— As you understand, any increase in oil prices affects all consumers, regardless of where they buy it — in Iran, in Russia or somewhere else, - the expert concluded.