In the week ending October 18, 2023, the Persian Gulf averaged oil shipments passing through the Strait of Hormuz and alternative routes to over 24 million barrels per day. This figure reflects better performance than what energy analysts had predicted.
Energy Market Analysis and Military Implications
According to data from the ship tracking company, Kpler, this region has endured the consequences of war over eight months. Analysts at JP Morgan stated in a report that energy markets are "converging with a permanent and endless dispute." This view has reinforced the belief in the administration of Donald Trump, the President of the United States, that the Persian Gulf can withstand another round of military conflicts.
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However, this perspective has been confused with the state of vulnerability of facilities and export terminals. Since the onset of the war on February 28, 2023, Iranian missiles and drones have damaged refineries and energy infrastructure in the Persian Gulf. These damages will have profound impacts on global energy markets, and the reconstruction of these facilities will take years.
Military Attacks and Infrastructure Damage
A study conducted by Reuters shows that at least 135 drone and missile attacks by Iran on 84 infrastructure centers in seven Gulf countries have been documented. These attacks have damaged Saudi Arabian refineries as well as export terminals in Fujairah.
At Ras Laffan in Qatar, the largest liquefied natural gas production facility in the world, attacks on the cooling chambers housing gas liquefaction equipment have led to the shutdown of two LNG production units. This incident will impact approximately $20 billion of Qatar's annual revenue.
Despite the successful performance of air defense systems, the missile interception rate alone cannot be a suitable measure for assessing the level of protection of energy infrastructure. To disable a refinery or a liquefied natural gas production facility, it is not necessary for that facility to be targeted multiple times. It is enough for just one of its critical components to be damaged.
On March 18, the Qatari Ministry of Defense announced that its forces intercepted four out of five ballistic missiles fired by Iran towards Ras Laffan. However, this attack still resulted in the shutdown of two LNG production units, demonstrating that even a high interception rate cannot prevent serious damages.
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