“12-Day War”: Why no energy crisis? Iran regime was cornered. Seeing USA’s limited aims, it dared not escalate, gave up. | My Al Jazeera comments

The ceasefire Trump brokered will hopefully end this “12-Day War.” I want to discuss here why this war did not trigger a global energy crisis. [Here’s what I said about this to Al Jazeera last week, in the last five paragraphs. A PDF is also embedded below. I’ll also post a TRT-London show on Iran’s nuclear strategy, recorded Tuesday, soon.]

Analysis of the targets struck by the USA and Israel (listed by category on this Wiki page: List of attacks during the Iran–Israel war), shows a focus on destroying the nuclear program and the missile and other conventional force-projection capacities of Iran. The campaign also focused on killing related experts and leaders vital to these programs (summarized in this Wiki page: Casualties of the Iran–Israel war, and an AP report on 14 nuclear scientists killed, nine in the first strikes.

As for energy, this limited scenario posed minor risks to global energy, while the second scenario would likely bring an epic crises for global oil and gas/LNG supplies. Instigating such a crisis would be an act of desperation by the regime, only undertaken if and when it felt it was being deposed or systematically decapitated, and it would quite surely evoke a catastrophic counter onslaught.

Perhaps surprisingly, the shock of the initial Israeli raids on 12 June evoked only a $10-per-barrel “risk premium” uptick in the price of oil. And, within several days, this price spike largely vanished, leaving markets quite calm despite the ongoing bombings. As long as the aims of the USA-Israeli coalition remained limited and not to destroy the regime, there would be little or no energy impact.

Markets became reasonably, after several days, about this nature of the campaign, at least the USA aims, and, so, also absent expectation that Iran would recklessly escalate the conflict by blocking exports through the Strait of Hormuz, the impact of the conflict on oil markets was completely manageable.

In particular, OPEC+ had been holding 3.6 million barrels per day (mbd) of production capacity offline since 2022, while another 2.2 mbd had been held offline voluntarily by eight OPEC+ members led by Saudi Arabia. Yet, despite this total of almost 6 mbd held offline, still the price of oil was stubbornly low, in the $70s per barrel range, due to persistently soft global demand, especially from economic slowdowns in China and Europe.

Then, unexpectedly, early this year these eight producing states began to stepwise return their 2.2 mbd to the market, so far in three tranches of about 410,000 bpd each, with the latest decision to do so taken June 1^st. (This seemed rather illogical given the continued low price of oil. But, as explained below, this may have been done by the Saudis, who perhaps had foreknowledge of the war on Iran Trump was planning, even before his visit to the Saudis in May. In any case, this oil that was brought back onto the market helped greatly to keep traders calm during the 12-Day War.)

Meanwhile consider that Iran, despite being under USA oil sanctions, has been exporting about 3.5 mbd to China, with the sanctions being observed by others.

As one can see, comparing these volumes, it would be relatively easy for OPEC and OPEC+ to replace this 3.5 mbd and yet still have spare production capacity held offline. And, USA frackers might respond too, increasing exports. So, if Iranian exports to China were cut off, it would have been no big deal for global markets to supply the loss.

So, immediately following the massive surprise USA bombing of Iran’s three deeply bunkered nuclear sites, amounting to a further massive humiliation on its home soil, the clerical regime had to decide quickly how to respond.

What it immediately decided was to conduct only a “performative” counter attack on 23 June, launching missiles against the USA’s big military base near Doha, Qatar. In a signal of, essentially, surrender to a force it had little effective defense against if provoked to escalate, the regime gave the US ample forewarning of the attack, insuring all incoming missiles were shot down.

In contract, a strategy Iran could have adopted – at its most optimistic – was to wage a protracted missile vs. Israeli-bombing war of attrition. The impact of Israeli bombing was daily proving however to be far more effective than what Iran could have ever delivered against Israel. It was unopposed massive aerial bombardments, with high precision, vs very costly missiles, a high percentage of which got shot down, and with a rapidly decreasing number of launch sites that had escaped Israeli bombs.

Iran might have decided to draw out the war, hoping to undermine domestic support in the USA and Israel, given highly polarized domestic politics, and simply hoping the USA-Israeli bombing could not in the meantime decisively destroy all their nuclear and missile programs.

However, rather wisely, facing the stark reality of the Iranian regime’s increasing vulnerabilities to bombings, it immediately accepted Trump’s offer of a ceasefire after launching its timid, performative retaliation on the US Doha base..

So, in all these aspects of the Iranian clerical regime’s responses to the demonstrated limited aims of the US-Israeli war, which did not include regime change or the wrecking the regime’s viability, there was no logical reason for it to escalate by blocking energy flows out of the Gulf.

This escalation would actually have been a form of regime suicide. It would have been a gift to the most hawkish elements of American and Israeli political classes long demanding a “bomb-them-back-to-the-Stone-Age” strategy to collapse of the regime.

It should be rather obvious that such a reckless, even suicidal decision by the regime to go for its true “‘nuclear’ option” of shutting down Gulf oil and LNG exports and/or destroying vital oil and gas infrastructure in Saudi Arabia, the UAE and Qatar would have surely brought much more massive bombings, exposing millions of innocent Iranian citizens to horrors not unlike that being suffered by the citizens of Gaza. The regime thus avoided the sort of reckless blunder its proxy, Hamas, had committed.

On October 7, 2023, Hamas gifted Netanyahu’s far-right nationalist coalition a spectacular causus belli against itself. Besides the justified Israeli war on Hamas that followed, the far-right nationalist Netanyahu government daily conducted this was in a manner that horribly escalates the “collateral damage,” terror and slaughter of innocent Gazan civilians. This has gone to such lengths that states in Europe, which have been long-time staunch supporters of Israel, now regularly issue castigations and warnings of sanctions for the evidently wanton burden on civilians.

The point here, is that In light of this experience in Gaza, the regime of the mullahs in Tehran was wise to offer a rapid and realpolitik de-facto surrender-via-ceasefire response to Trump’s offer, whether this was done for its own sake, for Iran’s citizens or both.

[Aside: Astonishingly, the Iranian clerical regime has never built civilian air raid shelters in Tehran (see here, ref. 40, from CNN) and, already, during this 12-day war, according to the Iranian health authorities, civilians suffered 387 deaths and 1,564 injuries, with further, unknown victims numbering 319 dead, 1,638 injured. And in the military: 268 deaths, 256 injuries.]

There are two aspects here – realizing how the Iranians could have rather easily seriously wrecked energy flows from the Gulf region, causing an epic global energy crisis and, second, why, if they behave rationally, they would not choose to do this given the aims of the USA-Israeli bombardments.

How would it be relatively easy to disrupt the Strait of Hormuz? It is not necessary to physically block every oil or LNG ship trying to enter the Gulf, rather the Iranian military would only have to hit one or very few oil and/or LNG tankers, or just in some way “fire over their bows” and immediately no insurance firm would allow any ship to traverse the Strait. So, the military-threat threshold for the Iranians to close the Strait is rather low.

To forcibly and credibly stop such a threat, the USA-Israeli alliance would have to engage in a really massive effort to destroy all possible sources of Iranian missiles, drones, or sea mines and also perhaps engage in close support of convoys of oil or LNG ships into and out of the Gulf, and also protect them while in port loading terminals.

If the Iranian regime had attacked oil and gas shipping, it would likely have been very difficult for the US Navy and its allies to suppress this. Consider how difficult it was, after two years of efforts, to have any effect on attacks by the far-less-capable-than-Iran Houthi rebels of Yemen against shipping through the Red Sea.

So, how did the Trump administration finally put an end to the Houti’s Red Sea shipping campaign? It subjected Yemen itself to a version of the “bomb them back to the Stone Age” strategy. This was so devastating to the Houthi homeland that they made a deal in May 2025, to stop hitting the ships.

We should assume the USA and Israel would do similar against Iran if it had blocked energy being shipped through the Strait of Hormuz. In other words, it would push Washington and Tel Aviv to go to scenario two, to a geostrategic aim they did not start with, systematically destroying the economic and infrastructural base of the country. Unable to guarantee safety of ships, they would devastate Iranian infrastructure and economy, as well as its military, such that the regime, if it survived, would not recover for perhaps decades.

I am quite sure the Islamic Republic fully understood these realities, and this explains why they swiftly accepted a ceasefire that will lead to a ruinous but unavoidable negotiated deal in the near future. If not, the USA-Israeli threat of a renewed bombing campaign with no Iranian air defense system in place, is highly credible.

As for the impact on the global oil and gas markets if flows were stopped from the Region by either method – by closing the Strait of Hormuz and/or destroying Saudi and/or other Gulf states’ oil and LNG infrastructure, this would likely have sparked the historically worse ever energy crises.

Here are US Energy Information Agency (EIA) maps and accounts of the high percentages of global oil and LNG flows from the region – which would be cut off, Amid regional conflict, the Strait of Hormuz remains critical oil chokepoint, June 16, 2025.

If this were to happen, I have little doubt that all oil-importing countries of the OECD, the Europeans, Japan, So. Korea, and such , regardless of their support or opposition for the initial USA-Israeli bombing campaign against Iran, would be constrained, for their energy security, to support the destruction of the Iranian regime’s capacity to ever do this again, if not the regime itself.

If the Strait were ever blocked or if Iran were to destroy Saudi, Qatari or other oil and gas production and export facilities, the IEA of the OECD’s Strategic Petroleum Reserves (SPR) would be released to the market. There would be a huge crisis, but there is a well rehearsed and proven plan to respond … the window here is that all OECD stats, by treaty, must maintain 90 days of their total imports of oil in storage for any such dire energy emergency..

This blog was named “the Global Barrel” 14 years ago, as a way of characterizing this “global, market-centered collective oil security system” established on the recommendation of Henry Kissinger, during the Arab-OPEC embargo of 1973. This system included founding of the IEA of OECD states and their Strategic Petroleum Reserves (SPR) treaty system, to deal with any possible future major disruptions of the global, market-centered oil system.

Some reflections on all this:

I began this blog, focused at that time to explaining how this market-centered system functioned. This was in opposition to a plethora of views (especially in academia, the press, and from populist politicans) at the time claiming that the global oil system was still something akin to that existing in the previous neo-colonial order, where developed importing countries each had to have national-champion oil majors with significant bilateral ties to specific producing countries in order to preserve their energy security.

These popular misconceptions were already 40-to-50 years out of date, but they still deeply influenced the public’s and many non-specialists’ understanding of the role of oil in the Iraq Wars, the Iranian nuclear crisis (then already a chronic thing), the fight against fundamentalist Islamic terrorism after 9/11, USA relations with Saudi Arabia, the role of China which was at that time becoming a major player in the global oil system, and the “resource nationalism” in Latin America via chavismo and other populists, and so on.

In general, the energy sector, and the role of energy in global affairs, in every era, has been heavily prone to populist misunderstandings. Today, what one especially fine are deeply populist and anti-scientific conceptions about “green” energy as a panacea for global warming, misconceptions which nowadays I use this blog to refute.

I note that one thing restraining the USA from seeking Iranian regime change presently is the absenceof any Iranian domestic-opposition movement, secular or Islamic, credibly capable of taking power if the regime were pushed out.

The reason for this is that the clerical regime has violently decimated every organized democratic and/or revolutionary-Islamic opposition group, much like the Shah had achieved against the leaderships of the democratic and radical-revolutionary opposition groups. This was, as I well recall, a major factor in creating a democratic and secular opposition-leadership vacuum despite years of such organizations struggles against the shah. The shah’s secret police had decapitated most of these groups. The Shia fundamentalist movement of Ayatollah Ruhollah Khomeini, which had a mass following exceeding anything the democratic and secular groups had ever anticipated, exploited this vacuum. And, the too-generous naivete of the democratic opposition, whether secular, Islamic or Marxist, failed to prevent Khomeini’s supporters from gradually seizing full power during the year following the Shah’s self-exile in the face of massive popular demonstrations that were eventually joined by revolting portions of the shah’s armed forces.

But this is history, and there are surely lessons in it. Today’s reality is going to be very difficult for the people of Iran. A severely weakened religious-fundamentalist regime will be undoubtedly more repressive volatile against the population, determined not to leave the stage they have now occupied for 46 years too long.

Your thoughts and critiques, or corrections are much appreciated. — Tom O’Donnell, in Berlin.