In an era marked by the fragility of global supply chains and rising geopolitical risks, few episodes better capture the intersection of energy and insecurity than the escalating conflict between Iran and Israel in mid-2025. The reverberations of this standoff have quickly rippled into global oil markets, prompting leading energy executives to refrain from making any long-term predictions about oil prices. At the center of this uncertainty lies one of the world’s most crucial energy corridors: the Strait of Hormuz.
On June 15, 2025, Israeli airstrikes hit several strategic targets in Iran, including the Shahran oil depot and Tehran’s key refining infrastructure. Iran’s response, which included missile attacks on Tel Aviv and Haifa, intensified fears of a broader regional war. This has injected volatility into oil markets and rekindled concerns about potential disruptions in the Strait of Hormuz, through which nearly 20% of global oil flows.
At the Energy Asia Conference in Kuala Lumpur, two influential figures in the energy sector, Lorenzo Simonelli of Baker Hughes and Meg O’Neill of Woodside Energy, voiced caution and restraint. Simonelli remarked, “Never try and predict what the price of oil is going to be, because there’s one sure thing: you’re going to be wrong.” O’Neill echoed this sentiment, adding, “The price of oil in five years is not something I would try to put a bet on.”
This hesitancy stems not only from the pace of current developments but also from the strategic sensitivity of the Strait of Hormuz. Described by the U.S. Energy Information Administration as the “world’s most important oil transit chokepoint,” the strait has historically been a barometer of regional stability (Yergin, 2008). If Iran were to close this vital corridor—a scenario currently speculated upon though not confirmed—the resulting supply shock would be profound.
The importance of the Strait cannot be overstated. According to Cordesman (2014), roughly 18-19 million barrels of oil and condensates pass through Hormuz daily, including most of Iran’s and the Gulf Cooperation Council’s exports. Iran, in particular, has repeatedly used the threat of closure as geopolitical leverage, recalling similar tensions during the Tanker War in the 1980s and the U.S.-Iran standoff of 2011-2012 (Katzman, 2020).
Simonelli described the current moment as “very fluid,” underscoring the rapidly changing nature of the conflict. While both Baker Hughes and Woodside are monitoring the situation closely, they have adopted a wait-and-see approach. O’Neill acknowledged that forward prices have already experienced “very significant” effects, with oil markets reacting swiftly to each new development.
Oil prices responded dramatically to the renewed military hostilities. Brent crude futures jumped more than 7% on June 14, reaching their highest point since January 2025. Though they settled slightly lower the following day, the markets remain jittery. Analysts from ClearView Energy Partners estimate that a complete closure of the Strait could push oil prices up by $8 to $31 per barrel, depending on duration and scale of disruption (Elliott, 2025).
This crisis unfolds against the backdrop of complex energy geopolitics. Iran, a major oil producer and member of OPEC, currently exports over 2 million barrels per day. Most of this goes to China, its largest trading partner (Kemp, 2023). Any interruption would force Chinese refiners to seek alternative sources, further tightening the already stressed energy supply landscape. As Joswick (2025) from S&P Global notes, this would likely raise shipping costs, inflate insurance premiums, and compress refinery margins across Asia.
Despite Iran’s retaliatory rhetoric, it has so far refrained from closing the Strait of Hormuz. An advisory from the Joint Maritime Information Center on June 16 confirmed that the Strait remains open, even as media narratives speculate about potential blockades. This restraint is likely driven by economic pragmatism. Iran, which relies heavily on oil revenues to sustain its domestic economy and circumvent Western sanctions, has a vested interest in keeping the channel operational (Bremmer, 2015).
Nevertheless, the threat alone introduces instability. As Harry Tchilinguirian of Onyx Capital Group emphasized, “It all boils down to how the conflict escalates around energy flows.” Even symbolic disruptions—such as missile strikes near oil facilities or rhetorical threats to shipping—can cause major price swings and disrupt logistical planning for energy companies (Klare, 2012).
O’Neill drew parallels between current events and historical precedents, including the 1973 Arab Oil Embargo and the Gulf War of 1990-1991, when oil prices spiked dramatically due to regional turmoil. These episodes have long served as case studies in the literature on energy security, highlighting the vulnerability of supply chains to geopolitical shocks (Raphael & Stokes, 2010).
From a political economy perspective, such crises reassert the primacy of oil in global politics. As Bridge and Le Billon (2017) argue, control over oil flows remains central to state power, diplomacy, and conflict. The Strait of Hormuz, in particular, has become both a symbol and a site of strategic contestation.
U.S. President Donald Trump’s appeal for a ceasefire during the G7 summit in Canada underscores the international stakes. While he reiterated support for Israel, his remarks also hinted at growing concern over the broader fallout. Meanwhile, Germany’s Chancellor Friedrich Merz emphasized multilateral diplomacy to prevent further escalation, calling for collective action from G7 leaders.
However, Iran has so far refused ceasefire proposals mediated by Qatar and Oman, suggesting that the conflict may continue to intensify in the near term. Civilian casualties from the exchange of strikes have added to the urgency, with both Israeli and Iranian militaries urging civilians to take protective measures.
Within the broader debate, oil executives’ reluctance to forecast prices illustrates a philosophical shift toward strategic ambiguity. As Mitchell and Mitchell (2021) observe, the global energy industry increasingly operates under the logic of “radical uncertainty,” where conventional forecasting models break down in the face of non-linear geopolitical risks.
This ambiguity, however, does not imply passivity. Both Baker Hughes and Woodside are recalibrating operational plans, especially in regions near or dependent on Hormuz. As oil prices stabilize around $74 per barrel, market participants remain sensitive to even minor signals from the region.
The consequences are not confined to international markets. American consumers are beginning to feel the impact, with pump prices expected to rise by as much as 20 cents per gallon in coming weeks. According to ClearView Energy Partners, this uptick will reverberate across transportation and manufacturing sectors, contributing to inflationary pressures in the U.S. economy (Kloza, 2025).
While some analysts argue that rising prices may incentivize U.S. shale producers to increase drilling, structural delays mean that any increase in output will take months to materialize. Moreover, rising capital and environmental costs make rapid expansion increasingly difficult, particularly in politically contested areas (Smil, 2017).
In conclusion, the Iran-Israel conflict has reignited one of the most volatile fault lines in the global energy system: the Strait of Hormuz. Although physical flows of oil have not yet been disrupted, the psychological and strategic weight of the Strait continues to drive market behavior. As energy companies navigate this uncertainty, they are adopting cautious, measured strategies rather than issuing bold forecasts. This is not merely risk aversion—it is an acknowledgment that in the 21st-century energy landscape, geopolitics trumps prediction.
References
https://www.cnbc.com/2025/06/16/iran-israel-conflict-energy-ceos-cautious-on-forecasting-oil-prices.html
https://www.reuters.com/business/energy/oil-prices-rise-israel-iran-conflict-heightens-fears-supply-disruptions-2025-06-15/
https://www.nytimes.com/2025/06/15/business/energy-environment/oil-prices-israel-iran.html
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