In a striking development that underscores the shifting dynamics of the global energy landscape, Saudi Aramco recently informed its international oil buyers that it remains uncertain which port will be used for its April shipments. This unprecedented ambiguity highlights a stark new reality: Iran, rather than the United States, now wields decisive influence over the reopening of global energy markets. The communication sent by Aramco to its clients worldwide indicated that shipments could originate either from the Red Sea or the Gulf, reflecting the fluid and precarious situation amid ongoing conflict in the region.
One seasoned Saudi oil purchaser candidly remarked upon receiving the letter, “I might as well call Iran to find out when this war ends so I can get my oil.” This statement captures the growing consensus both within the Middle East and internationally that, despite declarations from the US and Israel about the conflict’s conclusion, Iran ultimately controls the timeline. The International Energy Agency has characterized the current disruptions as the most severe ever experienced in oil and gas supply chains, a crisis that continues to reverberate across global markets.
US President Donald Trump has repeatedly asserted that the United States is nearing victory in the rapidly intensifying conflict, offering timeframes that range from a few days to several weeks. However, Iran’s retaliatory measures—launching drones and missile strikes against vessels traversing the Strait of Hormuz—have effectively halted the flow of approximately 20% of the world’s oil and liquefied natural gas (LNG). This chokehold impacts refineries, petrochemical plants, power generation facilities, and energy-dependent industries worldwide, exacerbating fears of prolonged supply shortages.
Industry leaders from both Middle Eastern and Western energy firms caution that simply ending hostilities will not be sufficient to resume normal shipping operations and production. Iran’s ability to manufacture and deploy low-cost drones provides it with a persistent capability to disrupt maritime traffic long after any official ceasefire. Despite President Trump’s suggestions that the US might deploy naval escorts to safeguard passage through the Strait of Hormuz and calls for allied warships to join the effort, experts warn that military escorts alone cannot guarantee safe transit unless Tehran agrees to halt its attacks and threats.
A senior official from the Gulf energy sector emphasized that without Iran’s assurance of safe passage, tankers will remain anchored, unwilling to risk navigating these perilous waters. Should the US and Israel proclaim victory on terms unacceptable to Iran, Tehran is likely to escalate its tactics, employing mines and drones to further destabilize the region. Neil Quilliam of the Chatham House think tank noted that Iran’s strategy aims to demonstrate resilience and refusal to be subdued, prolonging disruptions to global energy supplies.
The conflict’s reach extended further when drones targeted the UAE’s critical oil loading terminal in Fujairah shortly after US strikes on Kharg Island, Iran’s primary oil export hub. This sequence of attacks sends a clear message that no location in the region is immune from escalation. Helima Croft, a former CIA analyst now with RBC Capital, highlighted the risk of proxy attacks originating from Iran-aligned groups in Yemen and Iraq, which could further destabilize energy infrastructure and shipping lanes.
One particularly alarming prospect is the potential for Yemen’s Houthi rebels, allied with Iran, to target Saudi Arabia’s Red Sea port of Yanbu. This port serves as the kingdom’s sole alternative route for oil exports amid the Strait of Hormuz blockade. Such an attack would significantly heighten risks for the energy sector and the global economy at large, compounding existing vulnerabilities.
The ongoing crisis has severely undermined confidence in the security of vital supply routes and exposed glaring deficiencies in the region’s ability to protect its energy infrastructure. An energy advisor to the Iraqi government remarked that repairs to damaged facilities will take months, while insurance premiums for shipments have surged due to heightened risk perceptions. The ripple effects have been felt across multiple countries, with refineries in Saudi Arabia, the UAE, Bahrain, and Israel forced to shut down operations, pushing oil and gas prices up by as much as 60%.
Even if a swift resolution to the conflict is achieved, analysts from institutions such as Morgan Stanley warn that market disruptions will persist for weeks. Global oil companies may hesitate to return promptly to the Gulf, delaying the restart of production fields and risking damage to reservoirs due to prolonged inactivity. The closure of key shipping lanes has compelled producers to reduce output since they are unable to export their crude oil.
Saudi Aramco has already suspended production from two of its largest offshore fields, Safaniya and Zuluf, resulting in a 20% drop in output from OPEC’s leading producer. Iraq, the second-largest producer in the region, has seen its production plummet by 70%, while the UAE, ranked third, has experienced a 50% reduction, analysts. Overall, the Middle East’s oil output cuts now range between 7 to 10 million barrels per day, equating to roughly 7-10% of global demand.
Qatar has completely halted its liquefied natural gas production, slashing 20% of the world’s LNG supply and notifying customers that deliveries may be delayed until May. An industry insider summed up the prevailing sentiment succinctly: “It is simple – it is safety. We cannot risk lives.” This stark reality underscores the profound challenges facing the global energy sector as it navigates an unprecedented period of uncertainty and disruption.
