Bunker Busting: A Crossroads In The Middle East

The Israel-Iran conflict has entered a critical phase that shipping companies cannot afford to ignore. Our analysis of the military and strategic developments over the past 96 hours reveals concerning trends that could directly impact maritime operations and bunker procurement strategies.

Understanding the Military Escalation

The conflict has progressed through distinct phases, each with increasing implications for maritime commerce:

Phase 1-2: Air Defence Degradation

Initial strikes focused on systematically dismantling Iran's air defence capabilities and command structures, and also using ground and air assets to assassinate key members of the IRGC and regime leadership, prominent nuclear scientists and advisors. 

Phase 3: Energy Infrastructure Targeting

Recent operations have maintained the pressure on Iran’s air defence network and seen a round the clock drone presence in Iran to target Iranian surface to surface missile systems and command centres, but also shifted focus to Iran's energy sector, specifically, oil storage facilities and power generation infrastructure. Export terminals and port infrastructure remain untargeted thus far, but represent logical next-phase objectives if escalation continues. 

Phase 4 Implications?

Phase 4 is yet to become fully clear. Intelligence suggests potential targeting of Iranian naval capabilities to prevent closure of the Strait of Hormuz. Iran's diminishing missile inventory (reportedly reduced from 3,000 to 1,000 operational units) may force strategic decisions about deploying remaining assets against shipping lanes rather than Israeli territory. Iran has thousands of fast attack craft and mine-laying boats specifically to force closure of the Hormuz Straits if needed and such attacks are extremely difficult to defend against. 

Strait of Hormuz: The Critical Chokepoint

Recent Iranian statements indicate intentions to close both the Strait of Hormuz and Bab el-Mandeb strait using:

• Remaining ballistic and cruise missiles
• Naval mines
• Drone operations
• Proxy forces (Houthis in Yemen)

US Naval Response: The movement of US assets is telling:

• USS Carl Vinson maintaining high alert status in the Gulf
• USS Nimitz carrier group proceeding at maximum speed from Indian Ocean
• Movement of anti-ballistic missile-capable Aegis destroyers into the Red Sea and Gulf regions. 
• Establishment of a nearly-unprecedented air bridge of aerial refuelling tanker assets from CONUS to a forward deployment across Europe in support of airlifting or strike packages

The closing of the two international choke points by Iran and their proxies would be a catastrophe from a western point of view. 

All this suggests preparation for potential strategic operations and quotes from President Trump on leaving the G7 Summit early today may infer indirectly that the US may be ready to intervene. 

Technological Warfare Impact on Shipping

GPS and AIS Disruption

The conflict has introduced sophisticated electronic warfare capabilities affecting commercial shipping:

GPS Jamming: Recent vessel collisions off Khorfakkan demonstrate real operational risks. Three vessels are reported on fire following navigation system interference and it has been suggested that GPS jamming has been a factor in these incidents. It has also been blamed for the grounding of an MSC container ship in the Red Sea recently too. 

AIS Manipulation: For the first time, we're observing location spoofing of Automatic Identification Systems, as opposed to spoofing of transponder codes which has been known for some time and is something we already look out for in our compliance checking. This means vessels may appear to be in completely different locations than their actual position, creating:

• Compliance monitoring challenges
• Insurance implications
• Safety risks for vessel traffic management

Operational Recommendations:

• Implement backup navigation protocols immediately
• Increase bridge watch vigilance in Middle Eastern waters
• Consider manual position reporting procedures for critical transits

Nuclear Facilities: The Escalation Trigger

Israel lacks capability to reliably penetrate Iran's deeply buried nuclear facilities at Natanz, Fordow, and Isfahan ( at least 40-50 metres underground in bedrock). Only US B-2 Spirit bombers with specialised GBU-57 “bunker-buster” weapons can manage this so if the Iranian nuclear sites are to be destroyed permanently, only the US can do it. These specific aircraft types and munitions have been positioned in Diego Garcia in the Indian Ocean precisely for this exact mission in mind. The air bridge of at least 32 tankers the US has set up on the 16th and 17th across Europe is vastly more than such a strike would require and is also in the wrong place geographically to support strikes from Diego Garcia. This strongly suggests additional strike packages may be being spun up from CONUS as well. 

Strategic Significance: Recent statements and the US President's early departure from the G7 summit may suggest potential American involvement in targeting these facilities. This would represent a fundamental escalation with severe implications for regional shipping.

Immediate Bunker Market Implications

Price Trajectory:

• Current Brent crude at $74/barrel following spike to $78
• Wall Street analysts predict $80/barrel or higher if conflict continues past next week
• Worst-case scenarios (Strait closure) could drive prices to $120-130/barrel

Supply Chain Effects:

• Bunker suppliers in some areas will likely tighten credit terms (30-day to 7-14 day payment periods)
• Credit line pressures as higher prices consume existing facilities faster
• Potential supply disruptions if key Middle Eastern bunkering hubs are affected

Market Effects:

• High probability of Iranian naval mine deployment or missile attacks on commercial shipping 
• Vessel displacement from Middle East routes will increase traffic and potentially strain bunkering infrastructure
• Shipping companies will be reviewing all Middle Eastern transits and identify alternative routing options
• We may see strategic over-bunkering in secure locations before entering risk areas
• Existing CoA or TC business into or out of the Gulf region may no longer be attractively priced once additional war risk P&I premiums are factored in
  

Worst-case Scenario Planning

1. Mandab Strait Closure: Develop complete alternative routing via Cape of Good Hope
2. Regional Supply Disruption: Identify bunker supply alternatives in safe havens
3. Extended Conflict: Prepare for sustained high-price environment lasting months

The Next 48 Hours: Critical Decision Points

Military analysts suggest the conflict may reach a crucial juncture within 48 hours as Iran's missile capabilities approach depletion, whilst Israeli air assets, including its non-stealthy 4th generation strike aircraft and drones, operate with near impunity over Iran and show little sign of letting up their operational tempo and slowing sortie rates. This timeline creates urgency for shipping companies to implement contingency measures before potential escalation to a mooted naval warfare phase.

Key Indicators to Monitor:

• Iranian naval asset movements
• US strategic bomber and tanker support deployments outside of those already stationed in theatre, ie: on Diego Garcia. 
• Diplomatic communication attempts
• Further energy infrastructure targeting
• More maritime accidents and collisions in the Gulf region 

Conclusion

This conflict represents more than regional instability. It is nothing less than a potential paradigm shift for global shipping operations. The combination of military escalation, technological warfare, and strategic asset targeting creates a familiar but also unprecedented risk environment for maritime commerce, globally. A diplomatic solution from here looks a distant prospect and all the signs are that an escalation is on the horizon. 

Shipping companies must move beyond traditional risk assessments and prepare for scenarios that could fundamentally alter global trade routes. The next phase of this conflict will likely determine whether we face weeks of elevated costs and operational complexity to then see things calm down as a diplomatic solution is reached, or a sustained period of supply chain restructuring around Middle Eastern chokepoints and a meaningful shift in tonne mile demand across wet, dry and box sectors. 

Those who act decisively now to implement contingency measures will be best positioned to maintain operations regardless of how events unfold.