The Israel-Iran Conflict: Implications on Global Energy Sector

The ongoing Israeli-Palestine conflict is a long-standing issue that dates back to the end of the 19^th century. The conflict at present has taken its most violent shape and is presenting a situation that is conducive to chaos in the region and may have far-reaching consequences on the international plane. Since Hamas attacked Israel on 7^th October 2023, the IDF (Israel Defense Forces) has launched a counter-offensive against the organisation. However, their collaboration in attacking innocent Palestinians and bombarding cities has gathered headlines, and they are accused of adopting strategies that are genocidal.

In a new development, the conflict sees the involvement of another significant power in the shape of Iran to stand up in support of the Palestinians and wage a war of liberation for them against Israel. Once trusted allies, the partnership between both countries turned sour after the revolution in 1979, and this has bolstered Iran’s commitment to the Palestine state. Since the breakout of the offensive from Israel, they have been facing many of Iran’s proxies in deadly combats. While they have almost decimated Hamas through the constant bombarding of Gaza, they are still facing threats from Hezbollah and Houthis, organisations with the support of Iran that continue to inflict considerable damage. However, the incident on 1st October can be termed as the start of the direct combat between the two powers in West Asia, wherein Iran sent 180 ballistic missiles at Israel to take revenge for the killing of Ismail Haniyeh in Tehran and Nasrallah in Beirut. The attack by Iran, though not deadly, is reported to have damaged some military infrastructure and the offensive was condoned by allies of the Jewish state in the West.

At present, the global plane is conscious of the geopolitical implications and negative impact on energy that could be one of the possible results of the conflict's escalation. After Iran attacked Israel, oil prices saw a hike but have been contained around the normal range. The issue would persist if Israel were to attack Iran's oil resources and, in turn, affect the OPEC nations who are looking to add supply to the market in 2025.

The response to the attacks, just as predicted, has turned the energy situation in Iran and other dependent states into a catastrophe. Israel, on 26^th October, shattered air defence systems set by Iran to protect critical oil and petrochemical gas fields in significant ports of Southern Iran. This is even after the United States compelled its ally not to attack Iran's energy fields because it could generate an exaggerated response, destroying the global balance and even forcing the US to take part in the war. Iran's response to the attack is perceived to hamper prospects of peace in West Asia and might be the torchbearer of a deadly war involving many significant powers.

Israel could also hamper Iran’s trade relations, and the Kharg Island region seems to be the most vulnerable to attacks. This was perceived to be the likely response of the Jewish state until the retaliation on 26^th October. The attack on Iran's oil terminal would make sure that Tehran would have a tough time reviving its already plunging economy, and oil prices are predicted to see a hike if Israel looks to avenge the attacks in this manner. The only way such an impeding conclusion can be avoided is through US and Biden's efforts at keeping oil prices low because it could impact the elections and further dent his party’s hopes of another term. In a way, the US would have already thought about this situation, and though the chances of Israel attacking another of Iran’s gas fields are doubtful, they can negotiate with UAE and Saudi Arabia to stabilise oil prices, thus navigating the global order away from an economic crisis.

The conflict also offers an extensive chance of hampering the trade and economy of many countries in the region. Even major powers of Asia, like India and China, would be affected if there were to be a blockage of the Red Sea and Suez Canal trade routes that carry about 400 billion dollars annually and are the only way of access for trade with Europe, the US, Africa and West Asia. Despite sanctions from the US, Iran is still surviving on oil demands from China, which is ever increasing, and the conflict could negatively affect this trade, thus reducing Tehran’s strategic importance in the global order. In hindsight, the conflict's de-escalation is in the proper interest of everyone involved while also being necessary for the stability of the international plane. Close ties of Iran with China are also one critical viewpoint in the conflict, and the Asian superpower will closely watch the outcome of the attacks.

Historically, West Asian conflicts are known to escalate quickly and become a calamity that may have broader geopolitical connotations. The fallout between the two countries in West Asia could also raise the refugee issue and lead to a spillover of displaced people into Mediterranean countries like Italy and Greece. Thus, the conflict must be resolved through heightened cooperation involving regional Arab forces. Palestinian statehood and prevention of Israeli intervention in the process are instrumental for peace efforts and must be the most crucial catch point for international organisations like the UN. Prevention of any alteration in the region must begin with the acceptance of a security framework that the UN builds, and compliance with international law would permit short-term peace, if not everlasting peace, which is doubtful in the context of the complicated nature of the conflict.

Authors

1. Aaron Nair, Research Scholar, Department of International Relations, Peace and Public Policy (IRP and PP), St. Joseph’s University, Bengaluru-560027, India, Email: [email protected].
2. Urvi Begum, Postgraduate Student, Department of Political Science, St. Joseph’s University, Bengaluru-560027, India, Email: [email protected]
3. Dr. Karamala Areesh Kumar, Head, Department of International Relations, Peace and Public Policy (IRP and PP), St Joseph’s University, Bengaluru-560027, India, Email: [email protected], ORCID: https://orcid.org/my-orcid?orcid=0000-0002-3908-071X.