Israel and Iran have been exchanging strikes in recent days, targeting energy facilities in both countries. And now there is a cease-fire — as long as that lasts.
While key oil and gas infrastructure has been spared so far, top oil executives are raising alarms about the potential impact on global energy supplies and prices. “The last 96 hours have been very concerning,” said Shell CEO Wael Sawan at the Energy Asia conference in Kuala Lumpur, Malaysia.
He emphasized that Shell has a “significant footprint” in the Middle East and is closely monitoring the situation. TotalEnergies CEO Patrick Pouyanné expressed hope that further strikes would not affect oil installations, as it could have profound implications for safety and global markets. The company is the largest international oil company in the region, with operations in Iraq, the United Arab Emirates (UAE), Qatar, and Saudi Arabia.
There are growing concerns about potential supply disruptions, particularly in the critical Strait of Hormuz, which connects the Persian Gulf to the Arabian Sea and is essential for global oil supply.
Oil prices amid conflict
Amjad Bseisu, CEO of UK-based EnQuest, labeled 2025 as “the year of volatility” and noted that the conflict between Israel and Iran is “another step up.
Oil prices initially fell sharply after U.S. President Donald Trump declared a ceasefire between Israel and Iran, but doubts about the truce’s durability tempered the losses.
Despite the ceasefire announcement, there are reports of continued missile fire into Israel. Financial markets have been lifted by the ceasefire news, with stock markets edging higher. However, airlines are still halting some flights to the Middle East due to safety concerns.
Economists warn that the conflict could have significant economic repercussions for the United States, despite its occurrence far from U.S. soil. Federal Reserve Chair Jerome Powell noted that the U.S. economy is less dependent on foreign oil than it was in the 1970s, but repeated large shocks can have lasting effects on inflation. The Strait of Hormuz is a vital chokepoint for oil transportation, and any disruption could lead to a significant increase in energy costs, which would directly impact consumers.
As the global economy recovers from the pandemic, rising gas prices resulting from the conflict could strain consumer finances and potentially slow down economic growth.
