Saudi energy facilities attacked in Iranian strikes disrupting 1.3 million bpd

The ceasefire announced on April 7 has offered temporary relief to the United States and, by extension, the global economy. Oil prices have since fallen below $100 per barrel, the Strait of Hormuz may finally reopen, and global stock markets have rallied, recovering part of the losses recorded over the previous 40 days.

The coming days may prove crucial for stabilizing seasonal supply chains, particularly for fertilizer inputs transiting the strait during the peak planting period in the Northern Hemisphere.

Inside Iran, however, the outlook is far more complex.

The war effectively froze Iran's economic crises, shuttered markets, and halted price discovery. A similar pattern followed the 12-day conflict earlier in the war, when markets closed temporarily before reopening to renewed upward pressure as underlying imbalances reasserted themselves. This time, the damage is far greater.

During US-Israeli airstrikes on Iran’s strategic infrastructure, attacks on Mahshahr and Asaluyeh petrochemical facilities hit sites Iranian officials say account for 85% of the country’s petrochemical export capacity.

The steel industry was also hit. Since these sectors supply downstream industries from plastics to automotive manufacturing and construction, the full scale of disruption has yet to be assessed.

The Tehran Stock Exchange has been closed for more than 40 consecutive days.

The head of the Securities and Exchange Organization has indicated that war-damaged companies will return to trading at a later stage, meaning that even if the exchange reopens, a significant portion of major firms may remain inactive.

Reopening without viable export-oriented companies could trigger heavy selling pressure in a market where banks and automakers are already loss-making and reliant on state support.

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  Dollar-pegged pizza in Tehran points to a different kind of regime change

Inflation remains the most pressing crisis. Before the US-Israeli airstrikes, annual inflation had surpassed 70 percent — the highest since World War II. Food inflation reached triple digits, with bread and grains rising by 140 percent and cooking oil by more than 200 percent.

The war temporarily suppressed these pressures: demand fell amid unemployment, banking disruptions reduced the velocity of money, and property and automobile transactions slowed sharply.

With the Pakistani-brokered ceasefire, that suppressed demand is likely to return.

The fiscal picture offers no relief. The approved budget included a 65-percent rise in taxes, but roughly 60 percent of working-age individuals are currently unemployed.

In effect, the government is attempting to tax its way out of a fiscal crisis in an economy where the majority of working-age adults have no income to tax. Post-war military expenditures and reconstruction obligations have increased sharply, with no significant new revenue streams available.

Compounding this is the disruption of Iran's primary financial channel through Dubai, which for years served as a central hub for trade and currency transactions worth $16 billion to $28 billion annually.

Following recent attacks on Dubai, Emirati authorities reportedly detained dozens of currency dealers linked to Iran's Revolutionary Guard and shut down associated front companies.

Alternative channels in Herat and Erbil remain active but lack Dubai's scale. When suppressed demand for foreign currency returns, it will hit a narrower, less efficient set of channels, amplifying exchange rate volatility.

The ceasefire offered the world a reprieve. For Iran, it removed the only thing suppressing a crisis that had been building for months. When markets reopen, they will price in not only pre-war imbalances but the destruction of the export capacity that once generated foreign currency.

The rial will face a market that has every reason to reprice it sharply downward, and a state with fewer tools than ever to intervene. Iran's economy has not returned to its pre-war condition. It has moved past it.

Yet the ceasefire itself is fragile, reportedly violated several times within its first 48 hours. Even in the best-case diplomatic scenario, the technology and capital required for reconstruction will not materialize within weeks, and as long as the risk of renewed conflict remains, investors are unlikely to commit long-term capital.

What comes next at the negotiating table will shape whether any of it matters.

US President Donald Trump has launched a broad attack on several conservative commentators, including Tucker Carlson, Megyn Kelly, Candace Owens and Alex Jones, accusing them of supporting Iran acquiring a nuclear weapon and of seeking publicity.

In a post on Truth Social, Trump said the figures had “low IQs” and described them as “troublemakers” and “losers,” adding that they were no longer influential in mainstream media.

"I know why Tucker Carlson, Megyn Kelly, Candace Owens, and Alex Jones have all been fighting me for years, especially by the fact that they think it is wonderful for Iran, the Number One State Sponsor of Terror, to have a Nuclear Weapon — Because they have one thing in common, Low IQs," he said.

"MAGA is about WINNING and STRENGTH in not allowing Iran to have Nuclear Weapons. MAGA is about MAKING AMERICA GREAT AGAIN, and these people have no idea how to do that, BUT I DO, because THE UNITED STATES IS NOW THE “HOTTEST” COUNTRY ANYWHERE IN THE WORLD!" Trump added.

US President Donald Trump said on Thursday he is “very optimistic” a peace deal with Iran is within reach, even as a fragile ceasefire shows signs of strain.

Speaking to NBC News, Trump said Iran’s leaders were “more reasonable” in private talks and warned that failure to reach an agreement would be “very painful.”

He also said he urged Israeli Prime Minister Benjamin Netanyahu to scale back strikes in Lebanon to support ongoing negotiations, adding that Israeli operations were being reduced.

Iran’s parliament speaker Mohammad-Bagher Ghalibaf posted on X on Thursday that “time is running out” as tensions persist over a easefire with the United States.

In the post, Ghalibaf mentioned an earlier tweet, saying a Lebanon should be part of ceasefire and added "extinguish fire immediately."

For me, the question was not abstract. I came from a country where, for more than half a century, leaders had repeatedly threatened to weaponize the Strait. As an energy correspondent, I wanted to understand whether the region had built credible alternatives, or the world was still exposed to a risk it preferred to ignore.

Routing oil supplies away from the Strait of Hormuz has been a recurring topic in the Middle East, especially since the “tanker wars” of the 1980s. Regional governments had long been reviewing and funding contingency plans to deal with a possible closure of the Strait and to reroute their oil and petroleum exports.

Yet most of these plans never moved beyond paper, even after cabinet approvals. Those that did remained underfunded, and the volumes they could carry were a drop in the bucket compared to the total flow through the Strait of Hormuz.

Analysts I spoke to at the time believed such plans were not economically feasible in the absence of a real disruption. The reality was that regional countries were reluctant to commit billions of dollars to precautionary infrastructure that might never be needed.

And even if disruption did occur, many of them believed it would be short-lived — that the United States would intervene militarily and reopen the waterway quickly.

The alternative routes

As a result, projects remained limited in scope. Saudi Arabia’s East-West Pipeline carried oil to the Red Sea, but its capacity increases remained modest relative to the scale of Hormuz. The UAE’s Fujairah terminal bypassed the Strait, but remained geographically too close to be fully secure.

Other routes were even more constrained. The Iraq–Turkey pipeline faced political disputes between Baghdad and the Kurdish region over oil rights and territory. The Iraqi Pipeline through Saudi Arabia (IPSA), built by Saddam Hussein in 1989 to bypass Hormuz, has been largely inactive since 1990. Plans for a pipeline to Jordan’s Aqaba port depended on fragile Iraqi-Jordanian relations.

Deep-seated rivalries across the region prevented the implementation of most cross-border projects. The alternative plans were small, and governments were so reluctant to share information that I abandoned the article.

Two winners

Only two countries took the threat seriously.

China diversified its energy sources over the past decade and worked to reduce its dependence on the Strait of Hormuz.

The second was Iran, which built the Goreh–Jask pipeline to bypass the strait altogether, and also invested heavily in its ability to affect alternative routes.

Tehran repeatedly reminded regional countries that these alternative routes were vulnerable. The 2019 attacks on oil tankers near Fujairah, the 2019 drone strike on Saudi Arabia’s East-West pipeline, and the 2023 attacks by the Houthis on shipping lanes in the Red Sea were direct challenges to efforts to secure alternative export routes.

The US-Israeli war against Iran in March was a sobering reminder to the global economy that the world had long neglected one of its most critical chokepoints.
Iran managed to wipe out trillions of dollars from global markets by closing the Strait and added inflationary pressure to economies already under strain.

The price of securing the Strait was now much higher than the price of alternative projects would have been if they had been taken seriously.

Alternative routes were a partial answer at that time, but now they are no answer at all. During the US-Iran war, the region began to realize that a lasting solution lies not in infrastructure, but in a new regional security framework that limits the weaponization of the Strait of Hormuz.