Introduction
The recent surprise attack by Israel on Iran’s military and nuclear installations marks another chapter in the series of destabilizing events in 2025. As the world recovers from one crisis, another emerges: pandemics, energy crises, wars in Europe, and now a new front opens in one of the planet’s most volatile regions. The key question is how this new conflict could shake global energy markets.
Iran’s Role in Global Energy
Iran is not a minor player in the global energy chessboard. Despite international sanctions that severely limit its formal access to the oil market, Tehran has skillfully maneuvered to maintain significant exports. According to TankerTrackers data, Iran exports around 1.8 million barrels daily, mostly destined for China with considerable discounts. This discounted supply allows Beijing strategic advantages over Western competitors, ensuring lower energy costs that bolster its manufacturing position amidst intense global competition.
War’s Impact on Energy Markets
However, war dramatically alters the board. Open confrontation with Israel could limit Iran’s production and export capabilities, as well as increase scrutiny over its clandestine exports, making it harder for them to offer cheap crude to China. But the primary concern isn’t just Iran; it’s the constant threat to the Strait of Hormuz. This narrow maritime passage carries nearly 20% of the world’s daily oil and a third of its liquefied natural gas (LNG). It’s not just a strategic passage; it’s practically the most critical bottleneck for global energy markets.
Global Energy Crisis Risk
The mere possibility of a Strait closure would trigger an immediate global energy crisis. Deutsche Bank estimates that prolonged blockage could push oil prices to $120 per barrel, causing deep inflationary shocks in nearly all developed economies. China, heavily reliant on maritime routes for LNG from Qatar and Iran, would suffer severe impacts on its energy costs. Although Saudi Arabia has alternative routes like oil pipelines to the Red Sea, they’re insufficient to offset the Strait’s usual volume. Other Gulf countries like Kuwait and the UAE face potential colossal export losses, posing enormous economic challenges.
Implications for Mexico
What does this mean for Mexico?
The uncertainty generated by the conflict will continue to affect all global economies, perpetuating Mexico’s long-term economic stagnation. Financially, rising crude prices no longer translate into a windfall for the government. In January, crude production was just 1.42 million barrels daily. Meanwhile, the IEPS on fuels becomes increasingly relevant for revenue. If crude prices rise, so do gasoline prices, and unless the government wants another “gasolinazo,” it must absorb this impact by reducing the IEPS on fuels. However, in the long term, this could benefit the Mexican economy as it would disadvantage Asian competitors.
Key Questions and Answers
- What is the significance of Iran’s role in global energy? Despite international sanctions, Iran skillfully maintains significant oil exports, particularly to China, which provides strategic advantages in global manufacturing competition.
- How could the recent attack impact global energy markets? The conflict increases the risk of a Strait of Hormuz closure, which could cause an immediate global energy crisis, pushing oil prices to $120 per barrel and causing deep inflationary shocks.
- What are the implications for Mexico? The uncertainty from the conflict perpetuates Mexico’s economic stagnation. Rising crude prices no longer benefit the government, and the IEPS on fuels becomes increasingly important for revenue. Long-term, this could disadvantage Asian competitors and benefit Mexico.
