How the conflict over Iran is changing the global oil map. Analysis
The main thing in the material:
- The military conflict over Iran is triggering a restructuring of the global oil market, comparable in scale to the shocks of the 1970s and the shale revolution in the United States.
- The Persian Gulf is losing its status as a reliable export hub. Alternative routes are becoming increasingly important. Russia is becoming one of the replacement channels
- A premium for an "affordable" barrel is being formed in the market — the price increasingly depends on logistics, and not only on supply and demand
- The global market is becoming more expensive, fragmented, and sensitive to supply disruptions.
The war in Iran is changing the geography of the global oil market. The conflict showed that a failure at one point causes a chain reaction and affects the entire trading system. And the global economy will feel the consequences for more than one quarter. The scale of what is happening is comparable to the oil shocks of the 1970s and the shale revolution in the United States - in all these cases, not only the price of oil changed, but also the architecture of the market itself. Izvestia investigated how the supply chain is being redesigned and what this will lead to.
Hormuz as a breaking point
The current energy crisis, which has arisen due to the actual shutdown of shipping in the Strait of Hormuz, surpasses the events of the past years. Serious disruptions to oil supplies caused by geopolitical upheavals occurred in the 70s, 80s, and 90s. Back then, the crises deprived the market of 4-6% of global supplies. Today, we are talking about 20% that pass through Hormuz.
If we look at the logic of historical events, then after the Yom Kippur War in 1973 and the Iranian Revolution in 1979, oil shocks were more likely due to a reduction in supply on the market. For example, when the countries of the Middle East decided to stop supplying oil to the United States, as well as to a number of European countries and South Africa for their support of Israel during the war against the Arab states. This has led to a sharp spike in energy prices and fuel shortages in Western economies.
In the 1980s, during the Iran-Iraq war, the market faced not so much a shortage of oil as the risk of its delivery. The parties purposefully attacked tankers and oil infrastructure, actually trying to disrupt the export cash flow. This episode was called the "tanker war". The United States was forced to launch an operation to escort tankers (Earnest Will) in order to ensure at least minimal supply stability. Then it became obvious that control over the safety of routes can be no less important than control over production.
For all the historical drama, the market is set up differently today than it was half a century ago. Firstly, it is more diversified by suppliers. Secondly, developed countries have strategic reserves, and the International Energy Agency has a mechanism for emergency coordinated oil production. In addition, thanks to the shale revolution, the US dependence on imports has significantly decreased.
Nevertheless, the current situation combines both historical crisis models. On the one hand, the supply is falling (some of the oil suppliers in the Persian Gulf have already reduced production), and on the other, the factor of logistical vulnerability is increasing. At the same time, the scale of the potential impact is higher: any disruptions in Hormuz instantly affect global prices. In other words, the global economy has become more sensitive to logistics and delivery speed. This effect will be further enhanced if the United States launches a ground operation in Iran and takes control of key hubs — Kharq Island and the Strait of Hormuz (we wrote about this in detail here). This means that the market may turn out to be even more nervous now than in the 1970s - it is threatened by the collapse of reliability. Therefore, the current energy crisis has already been called the largest in history.
According to Bloomberg estimates, the market is losing more than 7,000 barrels every minute due to oil supply disruptions. If the strait remains closed, the world will have to significantly reduce its oil and gas consumption. But this will not happen before prices rise so much that people begin to abandon air travel and personal vehicles. At the same time, analysts are already considering scenarios for the cost of a barrel to rise to an unprecedented $200 against a historical high of $147 in 2008. So far, the shortage of oil, gas and petroleum products is local and is most acute in a number of South Asian countries, including Sri Lanka, India, Bangladesh. However, in the coming weeks, the last shipments shipped in late February and early March will reach the United States and the EU, and then the shortage may become global.
New system logic
The war has already changed the map of the oil market. The Persian Gulf has transformed from a global export center into a partially blocked system, where Saudi Arabia supports part of the flow through the Red Sea, the UAE maintains limited bypass exports through Fujairah, and Iraq, losing its status as an important supplier, is trying to save its exports through the Kirkuk–Ceyhan pipeline to Turkey. For the global balance, this means not only a reduction in global supply, but also a reduction in the volume of varieties needed by the market.
In March, Saudi Arabia's oil exports, the world's most important energy supplier, fell by almost half compared to February, to an average of 3.3 million barrels per day. These values would have been even lower if the country had not redirected part of the volume to export terminals in the Red Sea. The main buyers are Asian countries. In addition, Riyadh continues to serve consumers in Europe and the east coast of North America. Supplies are provided by volumes stored in tanks on the Mediterranean coast of Egypt. Several supertankers also loaded raw materials on the Japanese island of Okinawa, where Saudi Aramco rents several storage facilities.
Against this background, there is a shift in pricing. Now the price is increasingly dependent not only on supply and demand, but also on the terms of delivery. This leads to the appearance of a new component of the cost — the premium for the route. Even without a physical shortage, the market places risks of disruption or delay in delivery. Therefore, oil from regions with stable logistics is becoming more expensive and in demand.
Since the main oil flow through Hormuz went to Asian countries, local refineries faced a shortage of specific grades comparable in characteristics to Middle Eastern raw materials. Bloomberg writes that surcharges for supplies from Malaysia, Indonesia and Vietnam began to reach $10 per barrel. Although their prices usually differed from the reference types by only $ 1-2.
The longer the crisis lasts, the more the market begins to distinguish between a "safe" and a "risky" barrel. Demand is beginning to shift towards suppliers independent of Hormuz — the United States, Brazil, Guyana, Norway, and West African countries. It turns out that the crisis around Iran is capable of accelerating the redistribution of the role of regions in the global oil market.
Reallocation of roles
The United States is indeed becoming the main supplier of alternative barrels. In 2025, the United States' oil exports amounted to about 4 million barrels per day. About half of this volume is usually sent to Europe, and about a third to Asia. In the first two months of this year, Asian consumers purchased about 70 million barrels of American oil. In March, demand from refineries, particularly in Japan, South Korea, Singapore and Thailand, increased sharply. 60 million barrels were purchased from April shipments, and this is the highest monthly figure in the last three years. Despite the significant volume of transactions, they will not help Asian companies cope with the crisis in the short term. From the moment of loading in the United States, shipments usually reach their destinations in Asia in about two months. Therefore, it is difficult to call the United States the "savior" of the market, they only smooth out the shock.
Russia can also be considered as a major replacement channel. In March, according to S&P, the volume of Russian oil delivered by sea rose to a three-year high (4.61 million barrels per day). Although India and China have recently been the main buyers of Russian oil (85% of exports), other Asian countries resumed or increased imports of Russian oil and petrochemical products at the end of March after the easing of US sanctions on shipments from Russia. The Financial Times writes that the Philippines and South Korea have already received shipments from Russia, and Vietnam and Sri Lanka is still in negotiations with Russian energy companies. Thailand and Indonesia have confirmed their willingness to purchase.
Last year, Indian companies reduced purchases of Russian oil under pressure from the United States. According to the analytical company Kpler, in February, Indian refineries purchased 1 million Russian barrels per day. By the end of March, the figure reached 1.9 million barrels. Some of the Russian oil destined for China, among others, was even redirected to India, as New Delhi began paying a 5% surcharge to current rates.
With Hormuz closed, Russia remains a major reservoir of oil for Asia, but within the limits of its existing export infrastructure and sanctions restrictions. This is important — Russia can redistribute flows, but it is not able to quickly replace all the volumes that have fallen due to the situation in the Gulf.
As an additional source of substitution for Middle Eastern supplies, manufacturers with access to the Atlantic can be considered — in addition to the United States, these are primarily Brazil, Guyana, Norway and a number of West African countries. So far, none of them is able to quickly fill a hole on the scale of Hormuz, but their role is increasing with the gradual increase in supply. Thus, Guyana produces 900 thousand barrels per day, and by 2030 production is planned to increase to 1.7 million. Guyana, Argentina and Brazil have already been named as the main drivers of oil production growth among non-OPEC countries.
Thus, the United States benefits from the scale of the export system; Russia benefits from existing Asian demand; Brazil and Guyana benefit from increased production; Norway benefits from the status of a reliable supplier. But globally, it's still a world of more expensive oil, because none of the alternative sources can replace the Persian Gulf and provide the market with a cheap and fast barrel.
The new geography of capital
If this process continues, the global oil market will become more fragmented and less efficient. Routes will lengthen, insurance and freight costs will increase, reserves will increase, and buyers will pay more for stability. In this configuration, a new map of trust in the global energy sector will be formed.
All this means that even with the formal preservation of production volumes, raw materials will become more expensive for the global economy. This means that inflationary pressure will increase, the influence of geopolitical factors on monetary policy will increase, and the predictability of investment decisions will decrease.
In the scenario in which Hormuz will be closed for a year, not only trade flows will change, but also capital flows in the global oil industry. The money will be invested in export pipeline projects bypassing Hormuz and in capacity expansion in the Red Sea and the Eastern Mediterranean. Saudi Arabia and the UAE will be valuable not only as producers, but as owners of rare bypass infrastructure. Iraq will either have to urgently expand its existing routes or systematically lose market share. Deep-sea mining will develop more aggressively in Brazil and Guyana. The role of Russia and the countries operating in the Atlantic in providing Asia with oil will grow. Eventually, the balance in the market will change — the center of gravity will shift from export centers that depend on narrow logistics points to suppliers with reliable supply corridors.
Переведено сервисом «Яндекс Переводчик»
