Forced Response — Iran Resorts to Mutual Assured Destruction Strategy

As the Middle East conflict intensifies, the global energy crisis worsens. In morning trading, Brent crude oil — one of the most popular benchmarks — approached $85 per barrel. The heaviest impact is on Asian countries, with significant effects also felt by the European Union and even the US. More details in our report.

A Forced Response to an Existential Threat

Iran has adopted a strategy of mutual assured destruction, prompted by the US-Israeli operation. The Strait of Hormuz is closed — one of the world's most vital shipping routes. Before the escalation, it transported 20 million barrels of oil daily to Europe, Asia, and America — about 20% of global oil trade and up to 30% of liquefied natural gas.

Ebrahim Jabbari, advisor to Iran’s Revolutionary Guard Corps commander:

"The price of oil has already reached $81 per barrel, and the whole world is undoubtedly waiting for it to rise to $200. They were stealing and exporting 20 million barrels of oil daily from this region. Some was sold, and tiny volumes returned to these countries. The Strait of Hormuz is closed. Anyone attempting to pass will be destroyed by fire. We will also sabotage pipelines in the region and prevent oil exports, putting them in a very difficult position. America owes trillions of dollars and craves the region’s oil. But we won’t let a single drop out."

The Strait of Hormuz provides the only exit from the Persian Gulf to the Indian Ocean. No comparable alternatives exist. Over 80% of oil and gas are transported through Hormuz to Asia — India, Japan, South Korea — with China receiving the largest share. As a result, China has suffered the most.

Francis Lun, CEO of Venture Smart Asia Limited:

"For East Asia, this is another day of sharp losses. I believe the situation with Iran is getting out of control, and I think US President Donald Trump made a huge miscalculation."

Maxim Borodenko, researcher at the Institute of Economics of the Russian Academy of Sciences:

"Not only is the Strait of Hormuz closed, but post-conflict damage to oil terminals, refineries, and the Fujairah port in the UAE is less discussed. This is a secondary route for oil from the UAE to the global market."

Due to hostilities, ports, pipelines, and oil production facilities in Saudi Arabia, Qatar, Kuwait, Iraq, Israel, and Iran have been destroyed or shut down. This causes resource shortages, logistical complexities, and the need to use reserves. The US has not escaped the consequences — local fuel prices have risen by an average of 11 cents, the largest increase in four years.

Public opinion in the US:

"I think fuel prices will continue to rise for some time. As someone in business, fuel costs worry me the most. It affects our business and might start creating difficulties for our company."

"This directly harms consumers and all Americans, regardless of race or religion."

The Middle East controls all oil prices. The US does not produce enough oil domestically.

Disruptions in oil and gas supplies from the Middle East have triggered uncontrolled panic among traders. European stock markets plummeted: the Stoxx index fell over 2%, and the FTSE index nearly 2%. Gas prices on EU exchanges soared 75%. Weaker European countries are already experiencing a crisis, not just impending. Moldova has declared a state of energy emergency.

Serbian President Aleksandar Vučić:

"You must understand that the situation is abnormal. If it continues, all of Europe will be in literal hell. Incredible things are happening. I don’t understand why people started a war when they know how dependent we are on Middle Eastern energy resources. They could have prepared better. When Serbia was attacked, they prepared more carefully than what is happening with Iran."

AIG senior technical analyst Axel Rudolf:

"15% of EU demand depends on the Strait of Hormuz. If it stops functioning, we will receive 15% less oil. Globally, this figure is about 20%. It’s extremely important not just for the EU but also for China, Asia, and the US. If this oil cannot be exported, we will need to rely on our reserves."

In Germany, fuel prices increased by an average of 16% in a week: diesel at €2.05 and gasoline at €1.99, with some places reaching €2.50.

A man in the Netherlands:

"Welcome to the Netherlands — a country where about 80% of people ride bicycles. After seeing fuel prices in Germany, I decided to check in Amsterdam — €2.16 per liter."

Sarah Wagenknecht, leader of the "Sarah Wagenknecht Party" (Germany):

"If the Strait of Hormuz remains closed, nothing will pass — no oil, no gas — and prices will soar again, as they already are. The economy, which has been in crisis for years, will not grow at all."

The US’s strike on Iran has hit the EU — a reluctant ally demanding control — and China, its number one adversary. The initial justification for the US-Israeli operation, Iran’s nuclear program, is already being forgotten.