In the early hours of Friday, June 13, Israel launched several waves of airstrikes on Iran, targeting command-and-control centres, ballistic-missile bases and air-defence batteries as well as nuclear installations.
The attacks also killed several Iranian military commanders and nuclear scientists. Israel indicated that this is only the beginning of a campaign that can last for days or even weeks. The question is, what will happen next? How will Iran respond? Will the United States get involved? What will be the impact on the oil and tanker markets? We don’t have any answers, but we can discuss a few scenarios and look back at what happened during previous conflicts in the region.
In an immediate response, Iran launched a drone attack on Israel, but that was largely ineffective. Most of them were shot down and no significant damage was reported. Since then, Iran has started firing ballistic missiles towards Israel. Analysts do expect a forceful response from Tehran, not least because the regime has to save face with their domestic population.
However, their options are limited. The Israeli attacks have reduced Iran’s ability to reach Israel and inflict significant damage. The capabilities of Iran’s proxies in the region, Hamas, Hezbollah, the militias in Iraq and the Houthi’s have been diminished and the Assad regime in Syria has been toppled.
Iran does have options to retaliate. They could try to close the Strait of Hormuz or disrupt shipping at this chokepoint through which more than 20% of global oil supplies are shipped. They could attack oil installations in neighboring countries or target U.S. military bases in the region.
However, all of these potential actions carry significant risks. Closing the Strait of Hormuz or attacking energy infrastructure in the region will spike energy prices, turn all their neighbours into adversaries and more likely than not draw the U.S. military, which has a large presence in the region, into the conflict. Closing the Straits of Hormuz may also hamper Iran’s own export capabilities and give the Israelis and/or Americans an incentive to attack their energy infrastructure (refineries, pipelines, export terminals).
Losing the income from energy exports would quickly exhaust Iran’s resources and ability to fight back.
In the immediate aftermath of the Israeli attacks, both oil prices and tanker rates moved up.
– Maritime Executive
