Iran can hit Gulf energy assets with missiles in retaliation for the US bombing, but will it actually use its strategic capabilities?

With President Trump’s decision to launch strikes against Iranian nuclear sites on the evening of June 21 Washington time, Iran now faces difficult decisions about how and where to retaliate. Trump has suggested that the United States was finished with military action if Iran refrains from doing so, but that is unlikely, and it will probably strike US military assets in the region in some manner. Striking energy targets to try to create havoc in global energy markets also is an option, but this is one where there are conflicting pressures on Iran. This could keep their response below that threshold.

Interrupting the flow of oil out of the Gulf in some manner is something Iran is probably capable of doing, and given the relative price inelasticity of oil demand, a large oil disruption event could do significant economic damage to the United States and other importers. This is true despite the United States currently being a net oil exporter. A severe hit to global supplies, even if it did not exhaust the large amount held in commercial and strategic stocks, can be expected to cause a price spike that would tend to strengthen inflationary pressures in the US economy as well as slow down economic activity somewhat, despite having a stimulative effect on US upstream activity.

The dilemma for Iran is that, despite being a very effective means of inflicting some economic pain on average Americans, the interdiction of oil has a number of serious downsides for Iran itself. Shutting down tanker transit through the Strait of Hormuz would cut off Iran’s oil exports, except for the small volume which could move via the port of Jask, outside the strait. It also would involve attacking ships sailing under the flags of neutral countries.

Iran also has markedly improved its relations with several of its Arab neighbors on the other side of the Gulf in recent years, particularly since the Saudi-Iranian agreement on normalization of diplomatic relations in 2023. Several of the Gulf Cooperation Council (GCC) countries have stated in recent months that they would not allow their bases or airspace to be used as part of a strike on Iran. However, all of the GCC countries have US military personnel present, and several host US aircraft, either routinely or on temporary deployment as a result of the current crisis.

While the seven B-2 bombers that carried out the strikes on Iranian nuclear facilities flew in directly from the United States, they were supported as part of the strike package by aircraft flying from GCC bases. That could lower some of the inhibition Iran would feel about undermining relations with GCC states.

The scenario that is predominant in the press is Iran “closing the Strait of Hormuz,” either by interdiction of ships, naval mines, or the use of anti-ship cruise missiles. The Iranian parliament reportedly approved a measure mandating the closure of the strait on June 22, but that does not necessarily mean it will happen. For the latter, its capability is well beyond where it was during the war with Iraq in the 1980s, during which the United States briefly provided naval escorts for tankers reflagged to fly the American flag and thereby come under United States protection. That eventually led to Operation Praying Mantis in 1988, a brief clash between Iran and the US Navy in which Iran lost most of its major naval vessels.

Including oil exported as refined products, about twenty million bpd has passed through the Strait of Hormuz in recent months. In the event of an extended closure, some of that volume could be rerouted through two alternate routes – the East-West crude oil pipeline, which can take oil from the Gulf to the Saudi port of Yanbu on the Red Sea, and the Abu Dhabi pipeline in the UAE, which can take a portion of its oil out to the Fujairah export terminal on the Gulf of Oman. They have nameplate capacities of five million bpd and 1.8 million bpd, respectively. These pipelines do not usually operate at full capacity.

The US Energy Information Administration (EIA) estimates that there would be 2.6 million bpd of incremental volume available to bypass the Strait of Hormuz in a disruption. An outage involving Iranian efforts to inhibit shipping could probably be reversed within a couple of months by US naval efforts to clear any naval mines and go after the mostly shore-based missile launchers involved.

A more lasting means of interdicting supply could be missile or drone attacks damaging uniquely important pieces of critical infrastructure. The Saudi oil processing facility at the pipeline hub of Abqaiq, which feeds into both the main Ras Tanura loading terminal on the Gulf and into the East-West oil pipeline to Yanbu is the most important vulnerability, but it is far from the only one.

The Saudi crude coming through Abqaiq needs to have sulfur gas separated, without which it cannot safely be loaded onto tankers. In 2019, Iran struck the sulfur gas separation towers at Abqaiq with drones, but only targeted less than thirty percent of its capacity, at a facility that was then running at less than sixty percent of capacity. That made Iran’s point of demonstrating their capabilities without producing a real disruption event and passed by below President Trump’s threshold for getting involved at the time.

Targeting Abqaiq again, with a much larger number of aim points intended to cripple the facility’s full capacity, could take several months to fix, and might end up being more significant in terms of lost volumes than a shorter closure of the Strait of Hormuz. Abqaiq is better defended from attack drones than it was in 2019, but it is within range of Iran’s short-range ballistic missiles like the Fatah-110. Iran has these in large quantities, and they are sufficiently accurate to target energy infrastructure.

About the Author: Greg Priddy

Greg Priddy is a Senior Fellow at the Center for the National Interest and does consulting work related to political risk for the energy sector and financial clients. Previously, he was director of global oil at Eurasia Group and worked at the U.S. Department of Energy.

Image: Anelo/ Shutterstock.com.

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