Analysis Oil & Gas Iran’s energy installations may be targeted in Israeli strikes By Eva Levesque October 4, 2024, 3:15 PM Creative Commons/Middle East Monitor More than 90% of Iran's oil is shipped from the central export hub on Kharg Island Israel may strike Iran’s energy sites Kharg is crucial to Iran’s economy Oil prices could rise in response Brent neared $79 a barrel on Friday, surging over 10 percent in a week, as markets and the wider world waited for a response to Iran’s attacking Israel with nearly 200 ballistic missiles on Tuesday. Israeli prime minister Benjamin Netanyahu may order an attack on one of Iran’s major oil centres or less significant installations such as small refineries, according to analysts. The most prominent of these facilities is the central export hub on Kharg Island in the north of the Gulf from which over 90 percent of the Islamic Republic’s oil is shipped. Iran has made significant efforts to diversify its export infrastructure, including building new facilities at Jask Port in the south of the Gulf outside the Straits of Hormuz. However, Kharg, situated 25 km off the Iranian coast, has been crucial to Iran’s economy for decades. Throughout an eight-year war with Iraq in the 1980s, the island served as the backbone of Iran’s crude exports “despite being targeted more than any other site,” Dan Rahmat, an energy analyst, told AGBI. ReutersAnalysts believe Israel may attack Iran’s oil infrastructure or other energy installations Other possible targets include an ageing 400,000 barrels per day (bpd) refinery at Abadan, which accounts for 17 percent of Iran’s refining capacity and 13 percent of its gasoline supply. However, Homayoun Falakshahi, senior crude oil analyst at data analyst Kpler, said the impact of hitting the refinery “would be manageable, as fuel shortages could be offset by increased smuggling from Iraqi Kurdistan”. Iranian oil exports have hit record highs despite Western sanctions, delivering a windfall of $35 billion a year to the government in Tehran. Despite US sanctions, Iran exported around 1.6 million bpd on average in 2024, out of the 3.5 million bpd it produces. In September it reached a record high of approximately 1.9 million bpd, according to Kpler. Around 97 percent of exports go to China, with the remainder sent to Syria, according to Falakshahi. The sanctioned barrels are transported via a “dark fleet” of old vessels with opaque or unknown ownership structures, spoofing tracking systems. The Opec+ alliance, headed by Saudi Arabia and including Russia, has about 5 million bpd of spare capacity, which it has withdrawn from the market to boost flagging oil prices. Oil prices jump 3% as Middle East conflict intensifies War, oil, safe haven assets and risk premium in the GCC Suez Canal revenues fall by $6bn as unrest continues Analysts at investment bank Goldman Sachs estimate that if other Opec+ members and other producers in the US and Latin America step up to compensate for lost Iranian exports, the oil price could increase by around $10 per barrel. The spike could reach $20 if the Opec+ alliance does not increase its output, the analysts said. Hasan Alhasan, senior fellow for Middle East policy at the International Institute for Strategic Studies in Bahrain, said an Israeli attack on Iran’s civilian oil infrastructure would constitute a serious violation of international law, “though this is unlikely to restrain Israel in the slightest”. However, Falakshahi said he believed that such attacks would mainly affect the lives of ordinary Iranians, “a consequence Israel may wish to avoid in its public relations strategy”.
