West Asia plays a central role in global energy, thus in global markets. As tensions escalate and the Strait of Hormuz, a key trade route, faces disruption, headlines assessing the wider impact of the Iranian conflict often centre on oil and gas supply.
There's one underlying reason that so many oil tankers and liquefied natural gas (LNG) cargoes pass through the strait, and that West Asia conflict shakes global energy markets. That reason is a geological one: an extraordinary concentration of oil and gas accumulations.
As the deadly Ukraine conflict showed in 2022, a predominance of supply from one region can, justifiably, ignite concerns over supply disruption. So much of the world's oil and gas supply is clustered in one region.
West Asia is responsible for some 30 per cent of global oil production and 1 per cent of global natural gas production. The revenues from this vast scale of production underpin the economies of many West Asian countries and provide important energy supplies around the world. Incredibly, all this oil and gas is found within a single minor tectonic plate – the Arabian plate.
This plate covers more than 1 million square miles and hosts 55 per cent of the world's proven oil reserves and 40 per cent of the natural gas.
The region also hosts a disproportionate number of giant and supergiant fields. Giant oil and gas fields are those with more than 500 millions of barrels of oil equivalent; supergiant fields are those with more than 5 billion barrels of oil equivalent.
The Arabian plate is bound by the Red Sea, the Zagros Mountains, the Indian Ocean and the Mediterranean. It separated from the African plate about 25 million years ago. As the Arabian plate shifted northwards and collided with the Eurasian plate, it formed the Zagros Mountains.
The Arabian plate hosts a quarter of all the world's giant and supergiant fields. Historically, over 500 commercial fields have been found here. Today, current production accounts for roughly a third of global output.
In Iran, commercial production began in 1908 when oil was discovered just over 50 miles northeast of the city of Ahvaz in western Iran. That oil field is known as Masjed Soleyman. This discovery triggered a century of foreign involvement and political attention.
Development of Iran's oil and gas resources has changed at each of the previous turning points in its political history, notably the Iranian Revolution of 1979. Today, Iran hosts hundreds of fields, both onshore and offshore, notably including its share of the world's largest gas field - the South Pars/North Dome field, which is shared with Qatar.
Geologically, South Pars/North Dome is a single structure. Politically, it is divided by a maritime boundary. South Pars lies in Iranian waters; North Dome (also referred to as North Field) lies in Qatari waters.
The field was first discovered in Qatari waters in 1971, with its northern extent confirmed by Iran two decades later. The gas here is found in a series of reservoir rocks known as the Khuff formation.
These rocks are porous and permeable and are between 200 and 300 million years old. They are found extensively across the Arabian plate and lie almost two miles beneath the seafloor.
The development of this gas field transformed Qatar into the world's largest exporter of LNG. Until the recent strikes, North Dome, operated by QatarEnergy, was producing approximately 18.5 billion cubic feet per day. This enables Qatar to process and supply around one-fifth of the world’s LNG, accounting for around 80 per cent of Qatar's government revenues. Daily production at South Pars, operated by Petropars (a subsidiary of the National Iranian Oil Company), is estimated at around 2 billion cubic feet per day.
Over the past 25 years, driven by extensive drilling across South Pars, Iran's gas output has increased fivefold. Key importers of Iranian gas, by pipeline, are Turkey and Iraq. The National Iranian Oil Company has started developing its own LNG facility.
While LNG accounts for only about 8 per cent of global gas supplies, it is a crucial marginal source of energy in most countries, except those where electricity supply is dominated by hydropower or nuclear.
As tensions escalate and energy infrastructure comes under threat, the consequences are already reverberating globally. Disruptions to production in a region that supplies such a large share of the world's energy inevitably affect short-term prices, longer-term investment and political decision-making far beyond West Asia.
The Conversation