The Iran War’s Unnerving New Phase

If you’ve been following the Iran war, you will have heard about the surpassing geopolitical significance of the Strait of Hormuz, the narrow waterway responsible for carrying a fifth of the world’s oil out of the Persian Gulf. Shortly after first being attacked, Iran announced that it would not let ships pass through, a move that almost overnight created what the International Energy Agency called the “largest supply disruption in the history of the global oil market.”

The good news is that the effects of closing the Strait of Hormuz will reverse almost as soon as it is reopened. If the conflict were to end tomorrow, then everything would quickly go more or less back to normal. The bad news is that Iran has an even more potent weapon than closing the strait, one with the potential to turn a temporary supply disruption into a lasting shortage: destroying oil-and-gas infrastructure in Arab nations. In recent days, Tehran has demonstrated that it isn’t afraid to use it. President Trump, eager to avoid a full-blown energy disaster, has begun scrambling to limit the fallout. But the situation might not be in America’s control.

The war’s unnerving new phase began on Wednesday, when Israel launched an air strike on Iran’s largest natural-gas field, which supplies most of the country’s electricity. This was the first time since the conflict began that Iran’s energy production had been directly targeted. In response, Iranian President Masoud Pezeshkian warned of “uncontrollable consequences” that “could engulf the entire world.” The regime released a list of crucial pieces of oil-and-gas infrastructure throughout the Middle East that are now considered “direct and legitimate targets.” Hours later, Iran launched attacks on Qatar’s Ras Laffan complex, the largest natural-gas-export facility in the world, responsible for about 20 percent of the planet’s liquified natural gas.

[Rogé Karma: Would Trump risk an oil crisis?]

Until that point, Iran had conducted smaller strikes on nonessential infrastructure that could be repaired in days or weeks, mostly to send a message. This time, it targeted the most important pieces of equipment: the highly complex, expensive machines that turn vaporous natural gas into its liquified form that can be shipped around the world. The CEO of QatarEnergy, the state-owned operator of Ras Laffan, reported that the strike had caused “extensive damage” and that the destroyed units would take three to five years to repair. This caused natural-gas prices to spike by 35 percent in Europe.

Iran launched separate attacks on a major Saudi oil refinery and on two more in Kuwait, one of which is the largest refinery in the Middle East. These attacks did not inflict the same kind of lasting damage to key infrastructure as the Ras Laffan strike. Their purpose seems to have been to demonstrate how far Iran might be willing to go. “Our response to Israel’s attack on our infrastructure employed FRACTION of our power,” Iranian Foreign Minister Seyed Abbas Araghchi wrote on X following the attacks, declaring that there would be “ZERO restraint if our infrastructures are struck again.” The message got through. The price of a barrel of crude oil temporarily surged from about $100 to $120 shortly after the attacks. (The price was sitting at about $65 before the war.) “The Iranians have demonstrated a capability to escalate this conflict to a much greater extent than really anyone expected,” Gregory Brew, the Eurasia Group’s senior analyst for Iran and energy, told me. “We are on the cusp of this conflict entering a completely different phase.”

One might have expected Trump to react to Iran’s escalation with grandiose threats to unleash yet more devastation. Instead, he tried to take the temperature down. In a Truth Social post, he claimed that the United States “knew nothing” in advance about the Israeli strike on Iran’s gas field and promised that “NO MORE ATTACKS WILL BE MADE BY ISRAEL.” (Several Israeli officials have claimed that they in fact had Trump’s sign-off.) And he suggested that future attacks on Iran’s energy supply would occur only if Iran were to strike more of the region’s oil-and-gas infrastructure.

[Rogé Karma: ‘We would be entering a completely different world’]

The fact that Trump felt the need to deny responsibility—and promise a cessation of attacks on Iran’s energy infrastructure—is telling. Significant damage to the Middle East’s oil infrastructure would be devastating for the American consumer. U.S. gas prices are already up from $2.90 a gallon in mid-February to $3.90 as of this morning. A March 9 Deutsche Bank analysis of more than 500 international and U.S. routes found that airfares for domestic routes had increased by 15 to 124 percent, depending on the route and airline, and that transcontinental flights had gone up by 106 percent. The president of the American Farm Bureau Federation recently wrote a letter to Trump warning that “the U.S. risks a shortfall in crops” as a result of a global fertilizer shortage created by the crisis, and that the disruption would “contribute to inflationary pressures across the U.S. economy.”

Trump’s announcement appears to have calmed oil markets, for now. The price of a barrel of crude has since fallen back down to about $110, but the situation could reescalate at any moment. Hours after Trump’s post, Iran launched a missile strike against an oil refinery in northern Israel. (The strike caused “no significant damage,” according to Israeli officials.) This morning, it launched a second attack on Kuwait’s largest oil refinery, causing multiple fires to break out across the facility and forcing the Kuwaitis to suspend operations while the damage was assessed. Whether or not those strikes violated Trump’s red line against future attacks is unclear, given the characteristic inscrutability of his Truth Social post. Meanwhile, Gulf states are beginning to threaten military retaliation of their own. “We will not shy away from protecting our country and our economic resources,” Saudi Arabia’s foreign minister said yesterday.

At this point, the difference between de-escalation and escalation is the difference between an energy shortage measured in months and an economic catastrophe that could be felt for many years. And those choices are no longer Trump’s alone to make.