Israel's targeting of Iranian oil will spark a global economic crisis Economy News

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The Israeli Prime Minister's government hesitates Benjamin Netanyahu In launching a retaliatory strike against IranDespite the strong threat issued by the head of this government and its officials that the response will be painful and earth-shattering, and despite the approval of the American President joe biden Entitled Israel In response to the missile strike directed by Tehran against an Israeli on October 1.

However, fears of the effects of any Israeli strike on Iran and a reaction from Tehran have curbed the Israeli threat, especially due to fears of the devastating economic effects that might result from that.

Initially, the expected Israeli response options were limited to 3 scenarios:

• The response would be reciprocal, with Israel targeting Iranian military sites.
• The response should be escalatory, with Israel bombing economic targets such as facilities Oil And gas.
• The third scenario, which is the most severe, is for Israel to risk targeting Iranian nuclear facilities.

Observers believe that Israel will not be satisfied with a fleeting military strike, which rules out the first scenario. It will often resort to targeting economic facilities, and will not risk targeting Iran's nuclear program. However, targeting oil installations may have consequences not only for Iran and Israel, but may also include a region The Middle East And the whole world.

The Israelis, through the statements of their officials, want their response to the Iranian strike to be severe, which may open the door to the expansion of the conflict in the region and turn the situation into a regional war affecting several parties.

Iran expressed its fear that Israel would target its economic facilities, so it informed America through mediators that if this happened, the response would be to target Israeli infrastructure.

All estimates rule out targeting Iranian nuclear facilities, as this could result in a very large Iranian reaction, in addition to the possibility that it could lead to nuclear contamination that includes many countries in the region. This is in addition to the difficulty of Israel being able to destroy the Iranian nuclear facilities, most of which are located at a depth of about 100 meters. meters underground, and Israel does not have missiles that can penetrate this depth of fortifications.

Escalation option

The most likely response option is for Israel to target Iranian economic facilities, specifically the oil and gas facilities that Iran abounds in and is considered the main source of wealth for the country.

Iran's oil facilities are spread across many places in the country and vary between oil wells, pipelines, refineries, refineries, ports, export terminals, and petrochemical plants. Iran has more than 208 billion barrels of proven reserves. Iran's production capacity will reach more than 2.4 million barrels per day in 2023, of which about 1.4 million barrels per day will be exported, most of which are to China.

Israel's action to target Iran's oil facilities will cause severe economic turmoil for Iran, especially as it is going through difficult economic conditions in light of… Penalties imposed on it by the West for years. Israeli targeting may be directed towards the Iranian Kharg Island, which contains the terminal responsible for transporting 90% of Iran’s oil exports.

On October 3, the Trunk Tankers website – concerned with tracking the movement of ships at sea – reported that empty crude oil tankers belonging to the National Iranian Oil Tanker Company had begun moving away from Kharg Island, meaning that Iran expected Israel to target the island.

If Israel were to attack Kharg Island and disrupt its oil export activity, this would directly lead to:

• It will deprive Iran of a large portion of its revenues, as Iranians export half of their crude oil production and more than 90% of their oil exports go to China, which pays about two billion dollars a month for this, which represents about 5% of Iran’s gross domestic product.
• If Iran's oil exports stop, China will be harmed, but it can compensate for its oil needs from other exporters.
• Crude prices will rise, but they will not be greatly affected because there is someone who can compensate for the Iranian oil shortage under Imtilak Saudi Arabia The UAE has surplus production capacity that enables it to replace Iranian oil.

Expected Iranian retaliatory reaction:

• Iran is targeting Israel's oil installations, most notably the Haifa refinery in the north, and the Ashdod refinery in the center. It may also target Israeli offshore gas platforms such as Tamar, Leviathan, and Kresh, which will constitute a strong blow to Israel and its economy, which is burdened by the war it is waging against Gaza and Lebanon.
• Iran may target oil facilities in the Gulf countries in order to disrupt the export of oil from all countries of the region due to the cessation of Iranian oil exports.
• Iran may intend to close down Strait of Hormuz At the entrance to the Gulf, through which most of the Gulf countries’ production passes.
  In 2022, an average of 21 million barrels of crude oil passed through the Strait of Hormuz daily, and if it is closed, it will cause a major crisis not only for the countries of the region but also for the entire world, as crude prices will jump to more than $150 per barrel.

Alternatives to exporting the region's oil away from the Strait of Hormuz:

• The Saudi East-West Line, which transports Saudi oil to the port of Yanbu in the Red Sea (west of the Kingdom)
• The Habshan-Fujairah Line, which transports UAE oil to the port of Fujairah in the Gulf of Oman.

Alternatives will only help to a small extent in avoiding the consequences of closing the Strait of Hormuz because their capacity to absorb the quantities of exported oil is limited, and the possibility of entry into the Strait of Hormuz is limited. Houthi group Yemen is on the verge of a crisis that may push them to close Bab al-Mandab At the southern entrance To the Red SeaThis makes the arrival of Gulf oil to Asia almost impossible.

These measures will not harm Israel directly, but will harm America and Western countries by skyrocketing energy prices.

It is considered Gulf

On the third of this month, Reuters reported from three Gulf sources that Gulf countries are pressuring Washington to prevent Israel from attacking Iranian oil fields, fearing that its oil facilities would be exposed to fire from groups allied with Tehran.

Reuters quoted the three sources close to government departments as saying, “The Gulf states, including Saudi Arabia, the UAE, and Qatar, also refuse to allow Israel to fly over their airspace for any attack on Iran as part of its attempts to avoid being caught in the crossfire, and they have conveyed this to Washington.”

The Gulf states' moves come after diplomatic efforts by Iran to persuade its Gulf neighbors to use their influence with Washington, amid growing fears that Israel will target Iranian oil production facilities, according to Reuters.

A senior Iranian official and diplomat told Reuters, “Tehran warned during meetings in Saudi Arabia a few days ago that it could not guarantee the safety of oil facilities in the Gulf if Israel received any assistance in carrying out its attack.”
Ali Shihabi, a Saudi analyst close to the Saudi royal court, said: “The Iranians stated: If the Gulf states open their airspace to Israel, that will be a hostile act of war.”

The diplomat added, “Tehran sent a clear message to Riyadh that its allies in countries such as Iraq or Yemen may respond if there is any regional support for Israel against Iran.”