The escalating conflict in the Middle East has significant implications for the global oil industry, as fears of an energy crisis are increasingly being reported in the press.
On October 3, 2024, Reuters reported a rise in oil prices by over $3 per barrel due to concerns about regional instability. This price increase follows Hezbollah’s stark warning that a potential "energy war" could disrupt the global oil supply by 12 million barrels per day.
Hezbollah’s senior security official, Abu Ali al-Askari, indicated that if tensions escalate into an energy war, the world could lose 12 million barrels of oil daily.
Iran, a member of the Organization of the Petroleum Exporting Countries, produces approximately 3.2 million barrels of oil per day, accounting for around 3% of global output.
This situation is particularly troubling for California consumers since the state imports 75% of its crude from oversees. While the rest of the country has been working towards energy independence, California has done the exact opposite. Anti-local oil production policies like setbacks and outright bans have heavily curtailed in-state production even though the state is home to some of the most prolific reservoirs in the world.
On Thursday, October 3, 2024, Israel’s military ordered the immediate evacuation of residents from more than 20 towns in southern Lebanon as it continued its cross-border operations, targeting Hezbollah positions backed by Iran. Israeli Prime Minister Benjamin Netanyahu warned that Iran would face consequences for its missile attack on Israel earlier in the week. In response, Tehran vowed that any retaliation would result in "vast destruction," raising concerns of a broader conflict
The White House is concerned that retaliatory strikes could target key oil infrastructure. U.S. President Joe Biden acknowledged ongoing discussions regarding possible Israeli strikes on Iranian oil facilities, further contributing to the uncertainty in the region.
As the world grows far more dangerous, California cannot count on foreign oil producers to meet the state’s massive daily need of 1.8 million barrels at a fair price. The last thing on the minds of Middle Eastern producers is how expensive gasoline is for California families. They don’t care.