Oil traders view the escalating conflict between Israel and Iran as the most significant geopolitical event since Russia’s full-scale invasion of Ukraine in 2022. In recent days, energy facilities in both countries have been targeted, though key oil and gas infrastructure and flows have so far been spared. “The last 96 hours have been very concerning,” Shell CEO Wael Sawan warned on Tuesday.
Top oil executives are cautioning that further attacks on critical energy infrastructure could have severe consequences for global supply and prices. Sawan expressed his concerns at the Energy Asia conference in Kuala Lumpur, Malaysia, stating that Shell has a “significant footprint” in the Middle East. “How we navigate over the coming days and weeks is particularly top of mind for me and the leadership team,” Sawan added.
Security concerns have led to a surge in oil prices. International benchmark crude futures for August stood at $75.41 per barrel, up around 3%.
Security concerns drive oil prices higher
U.S. futures for July delivery were last seen up 2.7% at $73.74. TotalEnergies CEO Patrick Pouyanné emphasized that the French oil giant’s primary concern amid the Israel-Iran tensions is the safety of its employees in the region. He noted their longstanding presence in Iraq, as well as in Abu Dhabi, Qatar, and Saudi Arabia.
He expressed hope that oil installations would remain unaffected, warning of severe implications for global markets if they were hit. Amid these tensions, some shipowners have opted to avoid transiting the Strait of Hormuz, a vital waterway connecting the Persian Gulf to the Arabian Sea. Any disruption in the Strait could significantly increase global energy prices, raise shipping costs, and lead to substantial supply delays.
However, market watchers believe it is unlikely that Iran could successfully close the waterway. Amjad Bseisu, CEO of UK-based EnQuest, dubbed 2025 as, “the year of volatility.” He emphasized the urgent need for a resolution to the conflict, noting that although the market is well-supplied in the short to medium term, the ongoing unrest presents significant challenges. “The quicker we can come to an end to this terrible conflict, the better for overall markets,” Bseisu stated.
