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DW
13 hours ago
- Business
- DW
Why Israel's attacks aim to cripple Iran's energy sector – DW – 06/16/2025
As Israel and Iran attack each other with missiles, Tel Aviv is targeting especially vital energy infrastructure of its arch enemy, including key oil and gas facilities. What impact does that have on the Iranian economy. The escalating conflict between Israel and Iran, with both sides firing missiles and drones at each other, has even unsettled global energy markets. Israeli attacks on Saturday targeted Iran's energy infrastructure, including vital oil storage sites, refineries and power stations. Among the locations targeted was the massive South Pars gas field, which is part of the world's largest reservoir of natural gas. It's located off Iran's southern Bushehr province and is the source of most of the gas produced in Iran. Iran shares control over the South Pars gas field with neighboring Qatar, which calls the reservoir under its control North Dome. The attack, which forced Tehran to partially suspend production at the field, raised the prospect of a widening conflict threatening Iranian energy production and supply. Iran's Foreign Minister Abbas Araghchi has slammed Israel for targeting South Pars, saying it was an attempt "to expand the war beyond" Iran. "Dragging the conflict into the Persian Gulf region is a major strategic mistake, likely deliberate and intended to extend the war beyond Iranian territory," news agency AFP quoted Araghchi as saying during a meeting with foreign diplomats. Iran's heavy reliance on hydrocarbons Iran is a major player in the global energy sector, with the country home to the world's second-largest proven natural gas reserves, according to the United States Energy Information Administration (EIA). Data from the intergovernmental organization, Gas Exporting Countries Forum , show the country produced about 266.25 billion cubic meters (bcm) in 2023, with domestic consumption accounting for 255.5 bcm. About 15.8 bcm of natural gas were exported. When it comes to oil, Iran holds the world's third-largest crude reserves, or about 9% of the total proved oil reserves worldwide. The country extracts daily about 3.3 million barrels of crude and another 1.3 million barrels of condensate and other liquids, of which it exports around 1.8 million barrels, according to Brussels, Belgium-based data analytics firm Kpler. Iran is the third-largest oil producer in the Organization of the Petroleum Exporting Countries (OPEC). The income it generated from energy exports account for a sizeable chunk of government revenues and foreign exchange reserves. A report by EIA suggests Iran earned $144 billion (€138.5 billion) in oil export revenues in the three years from 2021 to 2023. "Iran uses several obfuscation techniques such as turning off its ship identification signals, applying ship-to-ship transfers, or relabeling cargoes as originating from other countries for both crude oil and oil products, which increases the challenge of providing precise export data," the report said. China remains a big importer of Iranian crude, with the country importing 1.71 million bpd in March, up 20% from 1.43 million bpd in February, news agency Reuters reported. Iran has been trying to obscure its oil export including by ship-to-ship transfers Image: picture alliance/ASSOCIATED PRESS The price of crude oil surged late last week after the Israel-Iran strikes began but it has since retreated, with both main oil contracts dropping by over 1% on Monday. If Israel intensifies its targeting of Iranian energy facilities, however, it could trigger a spike in global oil and gas prices. Sanctions cripple Iranian economy Despite Iran's vast hydrocarbon reserves, much of its potential remains untapped. Iranian officials acknowledge that the country needs advanced technology and billions of dollars in new investment to modernize its oil and gas sectors. But the Middle Eastern country is subject to one of the most stringent sanction regimes in the world, hampering its trade and investment opportunities. While a landmark nuclear deal between Tehran and world powers in 2015 promised sanctions relief in exchange for Iran restricting its nuclear activities, US President Donald Trump, withdrew the US unilaterally from the agreement in 2018 and reimposed sanctions during his first term in office. The Western sanctions, aimed at curbing Tehran's nuclear and ballistic missile programs, have targeted Iran's oil exports, banking and shipping, among other sectors. They have also severely curtailed Tehran's natural gas exports in recent years. The measures have effectively crippled the Iranian economy, which is currently reeling from a raft of crises such as soaring inflation and a collapsing currency. Israel pounds Iran from west to east To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video Blackouts in an energy-rich country Decades of mismanagement and geopolitical tensions have compounded the economic problems. Despite its vast oil and gas resources, Iran has been struggling with energy shortages amid declining production, outdated equipment and a lack of investment in infrastructure. Meanwhile, Iran relies heavily on natural gas for domestic consumption, particularly for electricity generation. Additionally, more than 95% of Iranian households are also connected to gas pipelines, and energy subsidies have resulted in overconsumption. In recent years, the mullah regime has beenforced to impose rolling power blackouts affecting both homes and factories to cope with spikes in electricity demand. Even Iranian President Masoud Pezeshkian in May criticized what he called the country's "excessive and inappropriate consumption" of electricity. Edited by: Uwe Hessler
Yahoo
24-02-2025
- Business
- Yahoo
Energy Costs Surge Across the United States
Electricity prices are on the rise, with this winter's energy expenditures in the United States projected to be a full 10% higher than this time last year. While initial projections had expected residential energy spending to fall this year, a combination of frigid weather and rising prices is hurting many Americans at the meter. U.S. energy prices are rising so rapidly that they are outpacing inflation, and have reached a 5% annual increase. Each year, the United States Energy Information Administration publishes a Winter Fuels Outlook that outlines forecasts for energy consumption, prices, and expenditures for American households. This year's initial report projected that homes mainly heating with natural gas would spend between 2% less or 7% more this winter than last. They've since had to update this report after frigid temperatures drove up energy demand and natural gas and propane prices have trended upward. 'January's cold weather increased natural gas consumption and resulted in near-record withdrawals of natural gas from storage,' the EIA reports. 'Similarly, U.S. propane inventories—which had been relatively full at the beginning of winter—were drawn down as consumption increased and are now near their previous five-year average. U.S. propane exports are also at record highs, which can also elevate domestic propane prices.' Last year, a CNET survey found 78 percent of Americans are concerned about rising energy bills, and that anxiety is not likely to be alleviated any time soon. While domestic energy prices are high across the board, the amount that you're paying at the meter also varies enormously by what region you live in. The price of a kilowatt-hour of electricity varies dramatically across the United States, from about ten cents in Washington state (thanks to cheap and abundant hydropower) to over 40 cents in import-dependent Hawaii. Some states also have deregulated grids, which were supposed to create a more competitive energy market and therefore drive down prices, but in reality this has not materialized. "It's unclear on a systematic level whether deregulation has actually led to decreases in electricity rates, and that's because there's so many factors, including things like what's going on in Ukraine and the rate-making process," Joshua Basseches, an assistant professor of public policy and environmental studies at Tulane University, recently told CNET. "Whether it's had the effect that was promised on prices of electricity is very much up for debate." Some experts contend that it's not really up for debate, and that it's clear that deregulation has failed in terms of lowering prices. The New York Times reports that consumers on deregulated grids have paid higher prices since 1998. 'On average, residents living in a deregulated market pay $40 more per month for electricity than those in the states that let individual utilities control most or all parts of the grid,' the Times reported back in 2023. But rising electricity prices are not unique to deregulated grids, or even to the United States. Across the Atlantic, an ongoing energy crisis has pushed millions of European households into energy poverty. Part of this is fallout from Russia's 2022 invasion of Ukraine, but new reporting indicates that it's also at least partially due to predatory pricing, with utilities taking advantage of market volatility at the expense of consumers. A report from British charity organization Citizens Advice found that UK utilities 'have pocketed a windfall of nearly £4bn from household bills during the energy and cost crisis' according to The Guardian. 'We now know that while households have struggled with sky-high energy bills, network companies have been making astronomical profits,' says Citizen Advice CEO Dame Clare Moriarty. While electricity pricing in the United States is more complex thanks to multiple and overlapping grids with different regulatory mechanisms, there is also some concern that utilities are allowed to set prices in ways that over-emphasize profit and harm the consumer. They're also allowed to set prices higher according to expected expenditures which they don't always deliver on. 'It's like the utilities have a rewards credit card,' Joel Rosenberg of Rewiring America, a nonprofit focused on electrification, told Vox last year. 'And they get to keep the rewards for how much they spend, and the [customers] have to pay off the bill, even if that bill takes 80 years to pay off.' There are many complex factors at play to determine what number shows up on your utility bill each month, the vast majority of which are outside of consumer control. However, not all hope is lost. There are key strategies that you can follow to lower your energy use and increase efficiency around your home to try to ease the sting of monthly bills in these frigid winter months. By Haley Zaremba for More Top Reads From this article on
