How war on Iran changed the global energy sector forever
Summary
Since the United States and Israel started a war on Iran in late February, the global energy sector has faced major disruptions. Many countries and energy suppliers have changed their oil transport routes and put emergency plans into action to handle high fuel costs, and experts say these changes will last a long time.Key Facts
- The war began in late February between the United States, Israel, and Iran.
- Oil prices have fluctuated significantly, reaching highs similar to those seen after Russia’s invasion of Ukraine in 2022.
- About one-fifth of the world’s oil and natural gas usually passes through the Strait of Hormuz, controlled by Iran.
- Shipping through the strait dropped sharply after attacks on two commercial ships blamed on Iran.
- Energy suppliers are using pipelines in Saudi Arabia, the UAE, and Iraq as alternative routes, but these pipelines cannot carry all the oil that usually goes through the strait.
- Iran signed an agreement in June promising to allow safe passage through the strait, but it still claims control over the waterway.
- Experts expect long-term concerns about safety and possible interruptions in the strait to continue while Iran’s current government remains.
- The war is driving energy producers to build more pipelines and buyers to keep larger stockpiles of oil, reducing dependence on the strait.
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