Analysts say supply interruptions tied to the Iran conflict could reshape global energy production and create opportunities for American and Western Hemisphere producers.
By yourNEWS Media Newsroom
Energy markets are facing heightened volatility following disruptions linked to the ongoing U.S.–Israeli conflict with Iran, with oil prices rising sharply and analysts warning that sustained instability in the Persian Gulf could trigger long-term changes in global energy production and supply chains.
Crude prices climbed from roughly $65 per barrel before the conflict to a peak of $119 on March 9 before settling near the $100 range. Energy analysts say continued disruptions in the Middle East—particularly around critical shipping routes—could translate into higher gasoline prices for American consumers in the coming weeks.
Experts note that alternative suppliers outside the Gulf have limited ability to quickly compensate for lost production in the immediate term. However, if elevated prices persist for a prolonged period, producers in the United States and South America could eventually expand output to fill supply gaps. Analysts say such increases would require time because new drilling projects and infrastructure development cannot occur immediately.
Long-term adjustments in global energy markets may ultimately reduce reliance on the Middle East as a primary supplier, according to a detailed analysis in a report from The Epoch Times.
Before the war in Iran disrupted maritime transport through the Persian Gulf, roughly 20 percent of global oil shipments moved through the Strait of Hormuz, a narrow 21-mile-wide corridor widely considered one of the world’s most important energy transit chokepoints. Much of that oil flows to major Asian economies including China, India, Japan and South Korea.
Recent attacks on vessels in Gulf waters have significantly slowed maritime traffic. Reports indicate that nearly 400 tankers are currently idled in the region as shipping companies weigh the risks of navigating the contested passage.
“In the near term, oil markets will likely remain dominated by risk premiums tied to shipping security and military developments in the Gulf,” Peter Earle, director of economics and economic freedom at the American Institute for Economic Research, said.
“If crude remains near or above the $100–$120 range, gasoline prices in the United States could rise noticeably within a few weeks as higher wholesale costs filter through to retail markets.”
According to Earle, gasoline prices typically increase by about 25 cents per gallon for every $10 rise in crude oil prices. He noted that the release of strategic reserves and the development of alternative transport routes could stabilize prices if the conflict does not escalate further.
Efforts to bypass the Strait of Hormuz have provided only limited relief. Pipelines built by Saudi Arabia and the United Arab Emirates allow some oil to move without passing through the chokepoint, but their total capacity remains far below normal Gulf shipping volumes.
Saudi Arabia’s East-West pipeline, which transports oil from the Persian Gulf to the Red Sea, can move as much as 7 million barrels per day. Caleb Jasso, a senior policy adviser at the Institute for Energy Research, said pushing that system to maximum capacity could strain infrastructure not designed for continuous high-volume transport.
The United Arab Emirates operates the Habshan–Fujairah pipeline, which bypasses the Strait by delivering oil to the Gulf of Oman. That system can move about 2 million barrels daily. Combined, these alternatives still fall far short of the roughly 20 million barrels per day that typically move through the Strait.
Shipping insurers have also begun raising premiums or withdrawing coverage for vessels operating in the region, adding another layer of pressure to global supply chains. The Trump administration has pledged to provide military escorts and insurance guarantees for tankers, although those initiatives are still being developed.
Meanwhile, international authorities are attempting to stabilize the market through emergency reserve releases. On March 11, the International Energy Agency announced plans to release 400 million barrels from strategic stockpiles—an amount more than twice the reserves released after Russia’s invasion of Ukraine in 2022 and equivalent to about 20 days of normal Persian Gulf oil traffic.
Founded in 1974 following the Arab oil embargo, the IEA includes members such as the United States, Canada, Mexico, Japan, South Korea, Australia and most European nations. Its mandate is to coordinate responses to major supply disruptions.
Some analysts believe the United States could eventually offset supply losses through expanded domestic production, though the process would take time.
“There is no chance that U.S. oil companies can ramp up any time soon to prevent temporary gas price hikes,” said Steve Milloy, a senior fellow at the Energy and Environment Legal Institute and a former adviser to the Trump administration.
“We are producing at record levels, and this only covers about two-thirds of our daily needs. We could improve this in the future, but that would be in the future.”
Despite leading the world in oil and gas production due to the shale revolution, American producers remain cautious about expanding drilling capacity after a previous downturn caused major financial losses. When oil prices fell from $100 per barrel to roughly $50 between 2014 and 2016, more than 600 companies in North America filed for bankruptcy.
Because of that experience, many companies now prioritize price hedging rather than aggressive drilling expansion.
“In the United States, most of the producers need oil sustained in the $85-or-above range before they’ll start thinking of adding more rigs,” said Alex Stevens, a policy analyst at the Institute for Energy Research.
Even after companies commit to expansion, additional production takes months to materialize due to infrastructure requirements.
“Shale production cannot ramp up instantly,” Earle said. “Drilling programs, labor availability, pipeline capacity and financing conditions mean it typically takes several months before higher prices translate into significantly higher output.”
Energy analysts also point to potential production increases in South America. Countries such as Venezuela, Guyana, Argentina, Brazil and Colombia possess large energy reserves, though political instability and infrastructure limitations could slow expansion.
Venezuela, which holds the world’s largest proven oil reserves, has struggled to restore output after years of economic turmoil and mismanagement.
“Output today is only a fraction of what it produced two decades ago, and restoring production would require significant capital investment, technical expertise and time,” Earle said.
Over the longer term, analysts expect the conflict to accelerate global diversification away from Middle Eastern oil supplies. The United States already produces about 60 percent of the oil it consumes domestically, while roughly 70 percent of imported oil comes from Canada and Mexico, according to data compiled by the American Fuel and Petrochemical Manufacturers.
Energy experts believe further policy initiatives could encourage expansion of export infrastructure for crude oil and liquefied natural gas.
“You’re going to see a greater push for global diversification away from the Middle East,” Jasso said. “The Strait of Hormuz is a choke point where, no matter what, Iran is always going to have the ability to cause a lot of chaos.”
Another long-term issue involves refining capacity. Although the United States leads global oil production, the country has not constructed a major new refinery since the 1970s.
American refineries were largely built to process heavy crude oil sourced from Canada, Mexico and Venezuela. By contrast, hydraulic fracturing in the United States produces lighter crude varieties often exported abroad because other countries possess facilities better suited to refining them. Analysts note this dynamic has contributed to continued imports even as the United States exports large volumes of energy.
“If you’re relying on other countries for refining capacity, that can be a bottleneck, and if there’s geopolitical conflict, that can disrupt the market,” Stevens said.
On March 10, President Donald Trump announced that America First Refining plans to begin construction on the United States’ first new oil refinery in half a century. The facility, planned for Brownsville, Texas, will be designed specifically to process light crude oil.
Beyond market disruptions, analysts say the conflict could carry broader geopolitical implications. China, the world’s largest importer of oil, relies heavily on shipments from the Persian Gulf.
“China is the world’s largest oil importer and relies heavily on supplies from the Persian Gulf, so any disruption around the Strait of Hormuz has immediate implications for its energy security,” Earle said.
China purchases more than 80 percent of Iran’s oil exports, representing roughly 13 percent of China’s total imports. It has also been the largest foreign buyer of Venezuelan crude, although Venezuelan supplies account for about 4 percent of China’s imports.
“If the U.S. can control Venezuelan and Iranian oil production, Trump will be the first U.S. president to gain a strategic leg up on China,” Milloy said.
Iran also holds a large supply of strategic minerals including uranium, copper, gold, titanium and zinc, while Venezuela contains an abundance of resources such as gold, iron ore, bauxite, coal and nickel.
Even so, analysts caution that China retains alternative supply options.
“It’s going to be a challenge for them,” Jasso said, “but it’s likely that they could call up [Russian President Vladimir] Putin and say, ‘We need more oil,’ and Putin would be very happy to get even more revenue from China.”
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