Fresh US and Israeli strikes against Iran could severely disrupt global crude supply, pushing oil prices to levels unseen in years. With Iran a key producer and the Strait of Hormuz under threat, markets are watching nervously.

Here is a closer look at the risks.

Iran’s production power and sanctions squeeze

Iran remains just inside the world’s top 10 oil producers, despite output dropping sharply since the 1970s under successive US sanctions.

"In 1974, Iran was the third-biggest producer in the world after the US and Saudi Arabia, and ahead of Russia, producing some six million barrels per day," Arne Lohmann Rasmussen, chief analyst at Global Risk Management, told AFP.

Today, Iran produces about 3.1 million barrels per day, according to OPEC, the oil-producing cartel of which it is a member. It is also believed to hold the world’s third-largest crude reserves, reinforcing its strategic weight.

Iran’s oil industry is considered stronger than that of Venezuela, another country affected by years of US sanctions.

Iranian crude is relatively cheap to extract, with production costs as low as $10 per barrel, Rasmussen said. Only Saudi Arabia, Iraq, Kuwait and the United Arab Emirates have similarly low costs. By contrast, producers such as Canada and the United States face costs of $40 to $60 per barrel.

US sanctions imposed since the 1979 Islamic Revolution have restricted export options, particularly after Trump revived a "maximum pressure" policy upon returning to the White House. Last year, Washington targeted Chinese "teapot" refineries for allegedly buying Iranian crude. China continues to purchase Iranian oil at discounted rates. Iran exports between 1.3 and 1.5 million barrels daily, with more than 80 percent bound for Chinese refineries, according to Hansen.

Strait of Hormuz: A critical choke point

The biggest immediate risk lies in a possible blockade of the Strait of Hormuz, long threatened by Iran.

Around 20 million barrels of crude passed through the waterway daily in 2024 — nearly 20 percent of global liquid oil consumption — according to the US Energy Information Administration. The strait is narrow, about 50 kilometres wide, and shallow, making it vulnerable.

"Even a doubt about security in the Strait would prompt many vessels, for insurance reasons, to face difficulties transiting, as premiums would rise sharply," Rasmussen said.

According to Saxo Bank analyst Ole Hansen, "only Saudi Arabia and the United Arab Emirates possess meaningful bypass infrastructure". The alternative route can handle a maximum of 2.6 million barrels daily, the EIA noted.

Regional risks and global economic fallout

Iran’s neighbours, including Gulf states, Turkey and Pakistan, fear retaliation. Their hosting of US military sites puts them at risk.

They "know they are vulnerable because the Iranians have enough basic intermediate-range missiles that allow them to strike vital points" in the worst-case scenario, said Pierre Razoux, director of studies at the Mediterranean Foundation for Strategic Studies.

Potential targets include hydrocarbon hubs, power plants and seawater desalination facilities.

A sharp rise in oil prices could also reignite global inflation. Crude hitting $100 per barrel for the first time since Russia’s invasion of Ukraine in February 2022 may have political consequences in the United States, especially as Trump has promised voters cheaper energy ahead of midterm elections later this year.