Attacks on Iran by the United States and Israel pose new risks to a significant portion of the world’s crude oil supply.
The Islamic Republic itself pumps about 3.3 million barrels a day, or 3% of global output, making it the fourth-largest producer in OPEC. But this country has much greater influence on the world’s energy supply due to its strategic location.
Iran lies on one side of the Strait of Hormuz, the shipping lane for about a fifth of the world’s crude from major suppliers including Saudi Arabia and Iraq. While the waterway remains open, some oil tankers were avoiding passing through after the attacks and ships were piling up on either side of the entrance, tracking data compiled by Bloomberg shows.
Oil markets are closed for the weekend, and there was no initial information whether any energy assets were targeted in the attack on Iran and the country’s retaliatory strikes across the region on Saturday.
Here are the pressure points to watch for in oil as events unfold.
Iran’s production
Despite persistent international sanctions, Iran produces about 3.3 million barrels of oil per day, down from less than 2 million barrels per day in 2020. The country has become more adept at avoiding these sanctions and is sending about 90% of its exports to China.
The largest oil reserves are the Ahvaz and Marun and western Karun clusters, all in Khuzestan Province.
Iran’s main refinery, built in Abadan in 1912, can process more than 500,000 barrels a day. Other major plants include the Bandar Abbas and Persian Gulf Star refineries, which handle crude oil and condensate, a type of ultra-light oil that is abundant in Iran. The country’s capital Tehran has its own refinery.
For Iran’s overseas shipments, the Kharg Island Terminal in the northern Persian Gulf is the main logistics hub. An explosion occurred on the island on Saturday, according to Iran’s semi-official Mehr news agency, which did not give further details or make any reference to the oil terminal.
Kharg Island has several loading berths, jetties, remote mooring points and a storage capacity of millions of barrels of crude oil. In recent years the facilities have handled export volumes in excess of 2 million barrels per day.
US sanctions discourage most potential buyers of Iran’s crude, but private Chinese refiners remain willing customers provided they get deep discounts. Tehran relies on a fleet of aging tankers for its international shipments that mostly sail with their transponders disabled to avoid detection.
Earlier this month, Iran was rapidly filling tankers at Kharg Island, perhaps in an effort to get as much crude oil into the water and move ships out of harm’s way if the facility was attacked. It was a move similar to the one that preceded the Israeli and US attacks last June.
Any strike on Kharg Island would be a serious blow to the country’s economy.
Iran’s main natural gas fields are in the south along the Persian Gulf coast. Facilities to process, transport and ship gas and condensate for domestic use in power generation, heating, petrochemicals and other industries in Asluyeh and Bandar Abbas.
The region is the main point of Iran’s condensate export. During the June War, an attack on a local gas plant caused panic among traders, but did not cause a permanent increase in oil prices because it did not affect any export facilities.
regional threats
On February 1, Iran’s supreme leader warned that there would be a “regional war” if his country was attacked by the US. Tehran has claimed that it is within its jurisdiction to completely close the Strait of Hormuz. This would be an extreme step that the country has never taken, but it remains a nightmare for global markets.
Hormuz is the main hub for major exports of crude oil from the Persian Gulf, as well as refined fuels such as diesel and jet fuel. Qatar, one of the world’s largest exporters of liquefied natural gas, is also dependent on the strait. At least three gas tankers bound for or departing from Qatar had their voyages halted after the latest attacks in the region, according to ship-tracking data.
While OPEC members Saudi Arabia and the United Arab Emirates have some ability to re-route their shipments through pipelines that avoid the Strait of Hormuz, closing the strait would still cause huge disruption to exports and send crude prices higher.
Other Gulf producers also showed signs of accelerating shipments in February. Saudi Arabia’s crude oil shipments averaged about 7.3 million barrels a day in the first 24 days of the month, the highest in nearly three years. Combined flows from Iraq, Kuwait and the United Arab Emirates were on track to climb nearly 600,000 barrels a day from the same period in January, according to data from Vortexa Ltd.
In the past, Tehran has retaliated against the energy assets of some of its neighbours. In 2019, Saudi Arabia blamed Tehran for a drone attack on its Abqaiq oil processing facility, which halted production equivalent to about 7% of global crude oil supply.
Many observers say it is unlikely that Iran can keep the Strait of Hormuz closed for long, making low-impact actions such as harassment of shipping more likely.
During last year’s war with Israel and the US, GPS signals from about 1,000 ships a day near Iran’s coast were being jammed, leading to a tanker collision. Sea mines are another long-standing threat to intercept shipping.
market reactions
Oil rose by the most in more than three years during the June war, with Brent crude rising above $80 a barrel in London. However, these gains quickly faded when it became clear that major regional oil infrastructure had not been damaged.
Since then, concerns about oversupply have dominated global markets, with the price of crude oil in London at the end of 2025 about 18% lower than where it started.
Despite fears of a glut, prices have risen 19% this year, partly due to fears of US attacks on Iran.
With key oil futures closed for the weekend, there is limited information on how traders are reacting to the latest attacks. However, a retail trading product operated by IG Group Ltd. was pushing the price of West Texas Intermediate to $75.33, up 12% from Friday’s close.
