TOKYO - The conflict involving Iran, the United States and Israel may be entering a more dangerous phase, with Tehran appearing increasingly willing to initiate attacks rather than merely respond to US strikes, while disruptions around the Strait of Hormuz threaten oil and liquefied natural gas supplies worldwide.
US President Donald Trump said on August 2 that he had decided against a large-scale attack on Iran and that negotiations would begin on the afternoon of August 3. Iran denied that any talks were taking place.
Trump had previously said a major strike was planned for July 31 after Iran launched missiles at a US military base in Jordan on July 29. The United States had halted a 13-day series of attacks against Iran on July 24.
Kazuto Suzuki, a professor at the University of Tokyo’s Graduate School of Public Policy, said Iran’s decision to strike after the United States stopped its attacks marked a significant change.
Until now, Iran had generally followed a pattern of retaliating after US attacks, including strikes on American bases in Gulf states and measures aimed at closing the Strait of Hormuz. This time, however, Iran initiated an attack despite Washington suspending its operations.
Suzuki said Tehran may have concluded that the United States was increasingly unable to sustain the conflict because supplies of Patriot and Terminal High Altitude Area Defense interceptor missiles were becoming depleted.
Iran may therefore believe that attacks on US positions can now have greater effect and give Tehran leverage in negotiations.
Trump’s decision to abandon the threatened large-scale strike could reinforce Iran’s view that Washington has limited military options. Suzuki said the United States appeared increasingly pressured, particularly because Trump continued to claim that Iran wanted negotiations even after Tehran publicly denied that talks were underway.
Kentarō Endo, a senior researcher at the Institute of Energy Economics, Japan, said the shift may have begun earlier, with Iranian attacks on tankers and commercial vessels on July 7 and July 11.
Those attacks came while the two sides were supposedly moving toward negotiations based on a memorandum that appeared favorable to Iran. Endo said the strikes suggested divisions between Iran’s civilian government and the Islamic Revolutionary Guard Corps.
Iranian Foreign Minister Abbas Araghchi recently gave a lengthy interview in which he appeared proud of the memorandum he had helped negotiate. Endo said this raised questions about why the Revolutionary Guard subsequently carried out attacks that threatened to undermine it.
The attacks may have benefited Iran by placing pressure on the United States, but Endo said they did not necessarily reflect the strategy preferred by Araghchi, President Masoud Pezeshkian or parliamentary speaker Mohammad Bagher Ghalibaf.
The Revolutionary Guard may be seeking more ambitious concessions than Iran’s civilian leadership. Hard-line factions have reportedly criticized proposals under which vessels would be allowed to pass through the Strait of Hormuz without charges for an initial 60-day period, arguing that Tehran was conceding too much.
Suzuki said the United States now faced a difficult choice between continuing attacks indefinitely and eventually accepting some of Iran’s demands. However, he added that Iran would also find it difficult to achieve the broader regional dominance sought by some elements of the Revolutionary Guard.
Both sides may ultimately have to compromise, although Suzuki said negotiations announced for August 3 were unlikely to begin as scheduled. A more probable outcome would be a prolonged period of limited attacks without a decisive settlement.
Iran and Oman, meanwhile, have reportedly entered the final stages of negotiations over the management of shipping through the Strait of Hormuz.
Iran has insisted that ships use a northern route under its control rather than the internationally recognized passage closer to Oman. A possible agreement could involve Oman recognizing some degree of Iranian control while receiving a share of navigation or management fees.
Experts cautioned that accepting such arrangements could encourage other countries to impose charges at strategic waterways. Indonesian President Prabowo Subianto has reportedly suggested that Indonesia could collect fees in the Strait of Malacca if Iran charges ships in Hormuz.
Shipping companies, however, face a commercial calculation. Diverting tankers around Africa can add about $5 a barrel to transportation costs, making the payment of a fee through Hormuz potentially cheaper despite the legal and geopolitical concerns.
The conflict also threatens the Habshan-Fujairah oil pipeline in the United Arab Emirates, one of the most important routes bypassing the Strait of Hormuz.
The roughly 370-kilometer pipeline carries oil from fields at Habshan to the port of Fujairah outside the Persian Gulf. Since the conflict began, it has transported about 1.6 million to 1.7 million barrels a day, equivalent to roughly half of the UAE’s crude oil exports.
The pipeline was completed in 2012 to provide an alternative export route in the event of disruptions in Hormuz. It is mostly buried underground for security reasons, but its pumping stations remain above ground.
The pumps are essential because the oil must cross the Hajar Mountains, where the pipeline reaches an elevation estimated at between 1,000 and 1,500 meters.
Robin Mills, a UAE energy specialist, said a successful missile attack on a pumping station could inflict severe damage and require months of repairs.
The loss of 1.6 million to 1.7 million barrels a day could raise global crude prices by between $10 and $15 a barrel from the current level of about $80, Mills said. The effect would extend beyond countries that directly buy UAE crude because the disruption would increase prices worldwide.
The pumping stations and pipeline are believed to be protected by air-defense systems, electronic jamming and physical barriers designed to stop drones. No major damage has yet been reported.
Suzuki said Iran had so far tended to calibrate attacks, striking targets that produced dramatic images while avoiding the most strategically important infrastructure.
However, if the conflict has entered a new phase and the Revolutionary Guard becomes more aggressive, Iran could begin targeting facilities whose destruction would cause serious economic damage.
Tehran may also use the pipeline as leverage in negotiations with the UAE, threatening to attack it if Abu Dhabi resists Iranian demands.
Iran nevertheless has strong incentives to avoid a complete rupture with the UAE. The UAE is one of Iran’s most important trading partners and serves as a major hub for goods entering the Iranian market.
Reports have suggested that the UAE has sought to restrain Iranian attacks by offering financial assistance. The UAE and Oman have also reportedly withheld participation in a Saudi-backed maritime security framework, possibly because they do not want to provoke Iran.
Energy analyst Go Matsuo said Iran appeared to be carefully controlling escalation in its attacks on Gulf infrastructure.
Satellite images of a Qatari LNG facility attacked in March showed that a heat exchanger had been knocked over, but surrounding equipment suffered little damage. Matsuo said the limited destruction suggested the attack may have been deliberately designed to avoid a larger explosion.
Shipping through the Bab el-Mandeb Strait at the entrance to the Red Sea has also fallen sharply. Matsuo said the number of ships passing through the area had been roughly halved since July 22.
Some vessels are carrying reduced cargoes through the Suez Canal because fully loaded ships sit too low in the water. Others are transferring part of their cargo through Egypt’s SUMED pipeline before reloading it in the Mediterranean.
The Houthi blockade of Bab el-Mandeb is connected not only to Iran but also to the group’s direct conflict with Saudi Arabia. Saudi control of the airport in Sanaa and threats to intercept aircraft traveling from Houthi-controlled Yemen to Iran have contributed to the dispute.
Suzuki said the blockade could continue until the broader conflict between Saudi Arabia and the Houthis is resolved.
The greatest energy risk may involve LNG rather than crude oil.
Europe is expected to enter the coming winter with historically low natural gas reserves. A British LNG research company forecast that European storage would be about 70% full on November 1, roughly 20 percentage points below normal and well below the previous low of 77%.
Europe normally begins winter with reserves near 90% and finishes the heating season with more than 35% remaining.
Under one scenario, if LNG supplies through the Strait of Hormuz resume in September and the winter is severe, European storage could fall to 12% by the end of the season. That would be below the previous record low of 18%.
If Hormuz remains closed until early next year, reserves could theoretically fall to minus 1%, meaning demand would exceed all available stored gas.
Under a colder winter scenario, the shortfall could reach the equivalent of minus 13%.
The analysis concluded that Europe would be unable to make up the deficit solely by withdrawing from storage. A mild winter could reduce the pressure, as it did following Russia’s invasion of Ukraine, but weather conditions cannot be relied upon.
Qatar is the world’s second-largest LNG exporter, and its tankers must pass through the Strait of Hormuz.
When the United States and Iran signed a memorandum aimed at ending hostilities in June, about 40 LNG tankers passed through the strait. After the passage became unsafe, the number fell to zero.
One Pakistani LNG tanker was reportedly seen passing through on July 29, the first such movement in three weeks.
Matsuo said LNG cannot easily be rerouted in the same way as crude oil. Natural gas must be cooled to about minus 162 degrees Celsius to become liquid, and liquefaction plants are enormous projects that cannot be quickly relocated.
Once liquefied, the LNG also cannot simply be sent through an alternative pipeline because it would warm and evaporate.
LNG carriers are particularly vulnerable because a fire can become extremely difficult to control. Matsuo cited a 1974 accident involving an LPG tanker in Japan that eventually had to be sunk by the Self-Defense Forces.
He also referred to an attack on a Russian LNG vessel in the Mediterranean on March 4, after which the fire reportedly had to be allowed to burn out.
There are only about 800 LNG carriers operating worldwide. A new ship can cost approximately 500 million to 600 million dollars, several times the price of a conventional oil tanker.
Owners are therefore unlikely to send them into the Strait of Hormuz until security has substantially improved.
Iran may increasingly recognize the power that control over LNG flows gives it. Matsuo said this leverage could remain particularly strong for about five years.
The United States is building substantial new LNG liquefaction capacity, and increased American supply may begin to offset lost Qatari and UAE output after 2030. Until then, disruptions in the Gulf could have an especially severe effect on global markets.
Europe may face gas shortages serious enough to restrict heating, Matsuo said.
European countries had earlier resold LNG to Japan, South Korea and China while prices were favorable, appearing relatively confident about supply. However, the continent now has far less gas in storage than usual.
Europe relies heavily on underground gas storage, filling facilities from spring through autumn and withdrawing supplies during winter. Without adequate reserves by early November, countries may struggle to meet heating and electricity demand.
Competition with Asia is also intensifying. LNG cargoes originally bound for Europe from the US Freeport terminal have reportedly been redirected to Asia after buyers there offered higher prices.
Europe is losing some bidding contests for available cargoes, pushing up prices in both Europe and Asia.
The energy crisis could also be worsened by heat-related problems at European nuclear power plants.
Low river levels and rising water temperatures have reduced access to cooling water in parts of Europe. Hungary has moved toward limiting nuclear generation, and similar problems could affect France and other countries during prolonged heat waves.
Japan is also under pressure over access to the Strait of Hormuz.
Iran’s Fars News Agency, which is close to the Revolutionary Guard, published conditions on July 9 for allowing Japanese vessels through the waterway.
The demands included refusing to join US-led political or military coalitions, opposing international resolutions and measures against Iran promoted by the United States and Israel, returning frozen Iranian assets in Japan in gold, refusing to purchase additional US government bonds and selling Japan’s existing holdings of American debt.
Endo cautioned that the Fars report did not represent an official Iranian government position or necessarily the formal position of the Revolutionary Guard.
However, he said such proposals were significant because they could gain support among Iranian hard-liners, whose political influence has grown during the war.
The demands are intended to exploit Japan’s strategic vulnerabilities. Japan is a close US ally but also depends heavily on the Strait of Hormuz for its energy imports.
Iran has issued different demands to other countries. Qatar, for example, has reportedly been told that Al Jazeera should not broadcast reports critical of Iran.
Japanese trading companies have also reportedly received emails from Iran’s state oil industry offering crude oil.
Japan bought Iranian oil until 2019, and recent reports have suggested that discussions on restarting imports may have taken place.
However, Japanese companies would find it extremely difficult to enter such transactions because US sanctions remain in place. Companies and banks involved in purchasing or financing Iranian crude could lose access to the American market.
Iran nevertheless has an incentive to expand sales beyond China, which has been the main buyer of its oil in recent years.
With supplies from other producers disrupted and prices elevated, Tehran may believe that more countries will be willing to consider purchasing sanctioned Iranian crude.
Endo warned that Iran’s attempt to exploit its control over Hormuz could ultimately be self-defeating.
The more Tehran pressures countries by restricting the strait, the more urgently governments and companies will develop alternative routes. Crude oil pipelines bypassing Hormuz are already being expanded.
Over time, such investment could reduce the strategic value of the waterway and weaken the influence Iran is trying to establish.
However, Endo said Iran’s diplomatic establishment may currently lack the power to pursue that longer-term argument because the Revolutionary Guard and hard-line factions have become increasingly influential.
A recent online survey by the Netherlands-based independent research organization GAMAAN also suggested deep divisions within Iranian society.
The survey, conducted in June with more than 30,000 participants, asked whether respondents felt saddened by the killing of Supreme Leader Ayatollah Ali Khamenei. More than half selected the lowest category of sadness, while about 24% said they felt nothing.
Another question found that roughly one in four respondents said they had participated in protests in January.
Endo said the survey was generally credible because of its large sample and relatively neutral wording, although younger people may have been overrepresented.
Suzuki said the findings showed that Iranian society remained divided. At the same time, the continuing war was strengthening conservative forces that have also played a central role in domestic repression.
As those factions gain power, ordinary Iranians could face even greater pressure.
Matsuo said time was running out for global energy markets. Trading for winter LNG cargoes normally begins about three months in advance, meaning transactions for the coming heating season will accelerate from late August through early October.
European gas prices surged in late August 2022 and also rose sharply in October and December 2021 when storage conditions became tight.
Current reserve levels are again approaching those seen in 2021, raising the prospect of higher electricity and heating bills and wider effects on households.
The United States and Iran may eventually be forced into a compromise, but experts warned that an extended period of limited attacks and failed negotiations could deepen the global energy crisis long before a political settlement is reached.
Source: TBS
