By Laura Sanicola
The world is preparing for a potential U.S. strike on Iran over attempts to denuclearize the country, despite talks between the two countries that are expected to continue in Geneva next week.
Most mainstream analysts think a direct hit on Iran's oil export infrastructure is unlikely, because it would risk a sharp price spike, higher gasoline prices, and wider regional blowback. But oil markets are pricing in about $5-10 of risk premium that there might be oil supply disruption in the region.
Despite years of sanctions, Iran pumps roughly 3.3 million to 3.5 million barrels a day, about 3% of the world supply, and controls the flow of one-fifth of the global oil markets through the Strait of Hormuz.
Here's what could happen to prices given an attack.
What parts of Iran's oil system matter most to markets?
The country's export network is anchored by Kharg Island, the main terminal through which most Iranian crude is loaded onto tankers. Any disruption there would quickly show up in export data and global balances.
Exports remain meaningful despite sanctions. Tanker-tracking data show Iranian shipments have recently climbed as Iran sought to export ahead of any possible action. Reuters reports that Saudi Arabia has also boosted production and exports as a precaution in case a strike disrupts flows.
On the production side, Iran's southwest oil belt in Khuzestan province -- including giant fields such as Ahvaz, which produces roughly 750,000 to one million barrels a day on its own -- forms the backbone of output. While wells themselves are rarely the immediate constraint, analysts say processing plants, pipelines and storage facilities in the region represent potential chokepoints because they are harder to repair quickly. But a broader destabilization of the Khuzestan province could put output at risk even without a direct strike on the field itself.
Have oil facilities in the region been targeted before?
Energy infrastructure has been part of Middle East conflicts for decades. During the Iran-Iraq War, systematic attacks on tankers, export terminals, and refining facilities in Khuzestan -- including the Ahvaz area -- removed as much as four million barrels a day from global market, though spare capacity from producers such as Saudi Arabia helped offset supply losses.
There has been relative restraint around attacking export infrastructure in recent Western military action. But attacks do not have to remove production permanently to move prices. The 2019 strike on Saudi Arabia's Abqaiq processing facility, widely attributed to Iran, temporarily knocked out 5.7 million barrels a day and triggered a sharp spike in crude prices. Saudi Aramco restored output within weeks by drawing on inventory buffers and rerouting crude from other facilities, which is why prices fell back quickly.
How might Iran respond in ways that affect oil markets?
For oil, Iran's response may matter more than the strike itself.
Even limited threats to shipping in the Strait of Hormuz can lift prices by raising tanker insurance costs and slowing deliveries, effectively tightening supply without removing production.
Iran has never imposed a complete blockage of the strait, and doing so would inflict enormous self-harm: it would cut off China, which imports more than 80% of Iran's oil exports and far more from Saudi Arabia and the Gulf beyond that. But Iran has repeatedly harassed, threatened, and seized vessels in the strait, most aggressively in 2019 when it impounded the British-flagged Stena Impero and attacked multiple tankers.
A second risk channel runs through Iran's proxy network. The Houthis in Yemen have demonstrated since 2023 that they can meaningfully disrupt Red Sea shipping, a separate chokepoint handling roughly 12% of global trade. They threatened to retaliate against the U.S. during last June's nuclear strikes.
What would a strike likely mean for oil prices?
Wall Street's real-time scenario analysis broadly converges on three outcomes.
The base case is a limited strike that leaves shipping and exports intact, in which oil would likely spike briefly and then stabilize as the geopolitical premium fades. That dynamic has played out repeatedly in past geopolitical flare-ups where infrastructure remained intact.
A more persistent move higher would require sustained loss of Iranian exports or attacks that spill into regional infrastructure. Goldman Sachs estimates that losing one million barrels a day of Iranian exports for a year would raise prices by roughly $8 per barrel.
The long risk is Hormuz disruption. In a worst-case scenario, OPEC+ holds some spare capacity to offset disruption: Saudi Aramco's quickly deployable reserve is probably closer to two million to three million bpd in practice. Rystad Energy estimates prices could jump $10 to $15 per barrel in a wider conflict; analysts at Tortoise Capital put the Hormuz scenario above $100.
Write to Laura Sanicola at laura.sanicola@barrons.com
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February 28, 2026 03:00 ET (08:00 GMT)
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