continue to escalate. Hezbollah rocket and drone attacks on northern Israel have forced tens of thousands of people to evacuate their homes. Should war erupt, its effects could reverberate through the energy market.
Iranian strategists may seek to disrupt the regional energy trade in order to amplify pressure on Israel, moderate Arab states, and their Western supporters. Indeed, there is precedent. On Sept. 14, 2019, Houthi rebels attacked Saudi Aramco’s oil processing facilities at Abqaiq, temporarily halving Saudi output and reducing global production by 5%.
A collective response by the so-called “axis of resistance” would be more dangerous. Disrupting Eastern Mediterranean gas fields and transport routes, striking ships transiting the Bab el Mandeb Strait, and seizing tankers in the Strait of Hormuz could disrupt global supply. As risk heightens, speculative trading and insurance hikes could amplify prices higher.