ES #142: Targeting Iranian Energy Infrastructure

Energy Shots #142

After several waves of escalating exchanges since Israel’s initial strikes last week, the Israeli campaign against Iran expanded over the weekend to include direct attacks on Iranian energy infrastructure.

• At the time of this writing, reports indicate Israeli attacks have targeted the Shahran oil depot, the South Pars Phase 14 gas processing facility, and the Shahr Rey (Tehran) oil refinery.

While Israel’s June 14 attacks demonstrate the potential for significant disruptions to Iranian energy exports, damage has so far been confined to assets with domestic economic relevance—limits that will likely be reinforced by the U.S. administration’s concerns about energy-driven inflation.

Still, international markets are beginning the week with refreshed perspective about the conflict’s potential to affect nearly a quarter of global crude supplies and almost a fifth of global LNG exports.

With social and institutional media channels saturated with speculation about possible outcomes, today’s report provides a brief data-centric look at three core takeaways:

1. Tangible impacts of Israel’s June 14 strikes on Iranian energy infrastructure

2. Realistic regional supply risks and viable Middle East spare capacity

3. Non-kinetic threats to regional energy exports

June 14 Impacts to Iranian Infrastructure

As of this writing, the following four facilities were targeted in Israel’s June 14 attacks with varying levels of damage. Disruptions at the four facilities will have a concentrated economic impact on Iran and a limited impact on global balances.

State-linked media outlets denied that the Shahr Rey (Tehran) refinery was hit directly, claiming that a fuel tank caught fire and that the refinery’s operational activities continue “without interruption”.

Videos of smoke rising from the Tabriz refinery circulated on social media, though the Tabriz Oil Refining Company and official sources have denied any damage and say the facility is operating normally.

Realistic Regional Supply Risks & Viable Mid-East Spare Capacity

Potential disruptions to Iran’s 3.3 MMb/d crude production have refocused the market’s attention on global inventories that suggest conditions remain moderately undersupplied despite 2Q25 OPEC8+ hikes.

Without a meaningful buffer in global stocks, the market will look to primary sources of spare capacity to offset potential Iranian crude production and/or export disruptions.

OPEC’s spare capacity emerges as the best candidate for this marginal near-term supply with two notable caveats:

1. The bulk of OPEC spare capacity neighbors the Israel-Iran conflict, with approximately 3.7-3.9 MMb/d of realistic spare capacity bordering Iran by land or water (separated by the Straits of Hormuz).

2. The prevailing narrative in mass-market media coverage cites Saudi Arabia’s viable spare production at nearly 3 MMb/d based on Saudi Arabia’s official capacity figure of 12 MMb/d. Meanwhile, Saudi Arabia has never sustained production of more than 11 MMb/d for a single quarter. Its highest quarterly average output was 10.97 MMb/d in Q3 2022.

Within the Middle East, the market can realistically expect less than 2 MMb/d from Saudi Arabia’s current levels, 950 kb/d from Iraq, and a combined total of 750 kb/d from Kuwait, UAE, Oman, Qatar, and Bahrain.

Global LNG Risk Profile

While Iranian natural gas production plays a limited role in international markets, the proximity of South Pars attacks to Qatari North Field assets is likely to be reflected in the risk premium for TTF and JKM.

Qatar’s LNG export capacity of 10.1-10.4 Bcf/d represents approximately 18.8% of global LNG exports. North Field is Qatar’s principal source of natural gas (10.1 Bcf/d) and includes ongoing expansions to add ~6 Bcf/d of capacity for mid-2026. 

Export Disruptions Possible Without Kinetic Force

Odds of disruptions to regional energy production and flows through the Straits of Hormuz and Red Sea are limited. Iran’s dependence on the Straits for crude exports to China—its primary funding source—is likely to prevent any kinetic threat to tankers in the chokepoint.

However, threats to act against vessels in the region could be enough to drive sharp increases in commercial marine insurance costs that indirectly curtail energy exports from the region.

The Mobius team is available to discuss portfolio-specific opportunities or downstream effects of the evolving Middle East conflict. Please reach out to your Mobius contact or submit a request here.

See you next Sunday.

ES.

This commentary contains our views and opinions and is based on information from sources we believe are reliable. This commentary is for informational purposes, should not be considered investment advice, and is not intended as an offer or solicitation concerning the purchase and sale of commodity interests or to serve as the basis for one to decide to execute derivatives or other transactions. This commentary is intended for Mobius clients only and is not considered promotional material.