The United States and Israel have focused their military campaign primarily on Iran’s military infrastructure, but the conflict has already begun to affect the country’s energy sector, and analysts warn that a deliberate targeting of Iranian oil production could be next. President Donald Trump has made clear he intends to maximize economic as well as military pressure on Tehran until it agrees to unconditional surrender.
The core of the military campaign has been the systematic destruction of Iran’s defense infrastructure. American B-2 stealth bombers have struck buried ballistic missile sites with dozens of 2,000-pound penetrating munitions. A large Iranian naval vessel has been hit and possibly sunk. Israel has destroyed large sections of Hezbollah’s command and logistics network in Lebanon. The defense secretary has promised a dramatic surge in US firepower, with the specific targets of that surge not yet disclosed.
Iran has already targeted energy infrastructure in its retaliatory campaign. Missiles and drones have struck at oil pipelines and other energy facilities in Gulf states alongside US military bases. The strikes have raised alarm in international energy markets and pushed oil prices higher. A deliberate Iranian campaign against Gulf energy infrastructure, combined with any US targeting of Iranian oil facilities, could produce significant disruptions to global oil supply.
The economic consequences of the conflict so far have already been severe. Oil prices have risen sharply. Tens of thousands of flights have been cancelled. Global stock markets have been volatile. Insurance costs for commercial shipping in the Gulf have increased dramatically. Several major shipping companies have rerouted cargo to avoid the conflict zone. The longer the war continues, the deeper these economic effects are likely to become.
Trump has dismissed economic concerns as secondary to his strategic objectives. His goal is Iran’s unconditional surrender and regime change. He has told the world that nothing short of that will end the campaign. Whether the world’s economies can sustain an open-ended conflict in the world’s most energy-sensitive region is a question that financial markets are beginning to ask with increasing urgency. Trump, so far, is not answering.