Energy Markets Stabilize Amid US-Israeli Conflict With Iran
Global oil flows remain above prewar levels as Saudi Arabia and the UAE build bypass pipelines to mitigate Iranian attacks in the Strait of Hormuz.
Global energy markets have remained resilient during an eight-month conflict between Iran and a coalition led by the United States and Israel. Despite Iranian attacks on tankers in the Strait of Hormuz since the war began in late February, oil flows averaged over 24 million barrels per day last week, exceeding prewar levels.
This stability is driven by reduced demand in China, lucrative shipping payouts, and strategic infrastructure projects. The Government of Saudi Arabia is converting a natural gas pipeline to transport 1.2 million barrels of oil per day to its west coast, while the United Arab Emirates is completing a second pipeline to Fujairah to bypass the primary chokepoint.
Donald Trump has transitioned from threats of destroying Iranian infrastructure to a strategy of economic warfare, employing financial sanctions and a naval blockade to pressure Tehran. While Brent crude prices have risen following reports of potential new U.S.-Israeli strikes, they have not returned to their wartime peaks. U.S. Ambassador to the United Nations Mike Waltz indicated that the United States may remain in a stalemate with Iran for the foreseeable future.
