The US-Israel strikes on Iran have launched one of the most dramatic conflicts in the Middle East in living memory. Aside from military targets, Iranian forces have attacked commercial shipping and infrastructure in the region. The objective is simple: to disrupt oil exports and weaken its opponents’ economies.

While the oil market is perfectly capable of absorbing short-term supply shocks, it is possible that the key protagonists, Israel and the US, may have very different war objectives. These differences could result in a widening and deepening of the conflict.

This could lead to a prolonged closure of the strait of Hormuz, which handles 25% of the world’s seaborne oil and 20% of liquified natural gas (LNG) trade. China and India receive almost half of the exports and Asia accounts for 87% in total.

In response, China has banned petrol and diesel exports, an important source of supply for the rest of Asia. Japan and South Korea are also highly dependent on Middle East oil, but are wealthy countries with large reserves.

It is the poorer Asian countries such as Pakistan and Bangladesh, with only days of petrol and diesel reserves, that will feel the pinch.

And Europe receives less than 5% of oil via this route.

As a result, Asian buyers have turned to “benchmark” grades of oil from the Atlantic basin such as Brent and West Texas Intermediate, driving the oil prices higher. At the start of the second week of the conflict, the price of........

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