Nearing a protracted Israel–Iran War: Oil endurance and economic resilience will decide the ultimate outcome

Editor's note: Ge Lin is a CGTN economic commentator. This article reflects the author's opinions and not necessarily the views of CGTN.

As the Israel–Iran war escalates and shows signs of drifting toward a protracted conflict, its most decisive battles may not unfold on the frontlines. Whether this war drags on will hinge not on missiles alone, but on the staying power behind them. Endurance—built on supply lines, financial resources, and external support—may ultimately decide the outcome. At the heart of this staying power is oil.

The reality for Israel: Striking Iran's oil lifeline could strain US support

While economic resilience may not be the war's explicit target, it is the hidden battleground that ultimately determines each side's capacity to endure over time.

Israel, despite its diversified economy, faces significant geographic constraints. Its area of control is estimated to lie between approximately 15,000 and 25,000 square kilometers, which amounts to only about 1 to 1.5 percent of Iran's landmass, depending on the statistical criteria used. Its limited territorial extent means Israel's domestic economy is highly exposed to disruption, as critical infrastructure and population centers are concentrated within a relatively small space vulnerable to wartime damage.

Consequently, Israel's ability to sustain a prolonged conflict hinges on external backing. As the war drags on, Israel's strategic path increasingly depends on drawing the United States into deeper military involvement—a necessity rather than a choice. Without US support on the ground, Israel would struggle to sustain a prolonged confrontation with Iran, both in mounting offensives and in withstanding counterattacks.

For Iran, oil remains the bedrock of its economy, with estimates suggesting that oil revenues account for 40 percent to 60 percent of the country's fiscal income. Although Iran has other economic sectors, many of them ultimately depend—directly or indirectly—on oil as their underlying economic foundation. The critical question is how much of Iran's oil production capacity can withstand future strikes, a factor that will directly shape the country's long-term economic resilience.

So far, US strikes have focused on Iranian nuclear facilities—more a political display than a commitment to substantial military engagement. Despite US President Trump's claim of overwhelming success, Iran reported only limited damage at its Fordow nuclear site, as sensitive nuclear materials and personnel had been relocated prior to the attack.

The United States and Israel are not fully aligned in their strategic objectives. Should Israel seek to expand its strikes to Iran's oil infrastructure, it would face a delicate constraint. Targeting Iran's oil economy—rather than focusing on the publicly emphasized nuclear threat—would severely test Washington's strategic patience and erode the political cover needed for deeper US involvement.

Without the justification of nuclear containment, Washington would struggle to defend its escalation both at home and abroad. In the short term, domestic anti-war sentiment, anti-Israel backlash, and mounting international pressure would weigh heavily on the US administration. In the long term, such an expansion would further undermine America's already fragile moral standing, constraining its freedom of action in future global conflicts.

To sustain US backing, Israel faces structural constraints that may restrict its operations toward nuclear-related targets—a tacit boundary that, paradoxically, leaves Iran's oil-based war endurance largely intact.

Iran, for its part, has established sophisticated methods to navigate around US economic sanctions. Rather than isolating Iran's oil trade, years of external pressure have prompted the development of resilient systems—comprising "ghost fleets," flag-switching practices, covert storage facilities, and discreet financial channels. These mechanisms have been quietly supported through tacit cooperation from actors within Iran's regional environment. The continued viability—and potential expansion—of these channels will largely depend on whether regional partners and significant external players, such as India, choose to maintain or deepen their energy engagement with Tehran.

The oil market's logic: Beyond war's immediate impact

Amid recent volatility in oil prices, it is important to recognize that the ongoing Israel–Iran conflict alone is unlikely to dictate long-term market trends. Instead, the oil market's pricing mechanism remains fundamentally governed by production management.

Global oil demand tends to be relatively stable and predictable, thanks to well-established consumption patterns and frequent monitoring by authoritative organizations through regular reports. In contrast, oil supply is more flexible and subject to geopolitical developments, production quotas, and strategic decisions by major producers. This elasticity in supply makes it the primary driver behind long-term oil market dynamics and price levels.

In addition, many tend to overestimate the Middle East's share of global oil production. According to the US Energy Information Administration (EIA), four of the world's top five producers actually lie outside the Middle East. The United States leads with 22 percent of global crude oil and petroleum liquids output, followed by Saudi Arabia and Russia at about 11 percent each, and then Canada and China at just over 5 percent each. The five core Middle Eastern producers—Saudi Arabia, Iraq, UAE, Iran, and Kuwait—collectively contribute only 26 percent of global supply, while the other five countries in the top ten account for 47 percent of the world's output.

Disruptions in the Strait of Hormuz may lead to increased shipping costs and short-term price surge, but they are unlikely to fundamentally reshape the long-term dynamics of global oil pricing.

One key reason is the substantial spare production capacity across the Middle East. Much of this potential output remains deliberately offline under normal conditions, not due to technical limitations but as part of strategic production management by regional oil producers. This reserve capacity provides meaningful flexibility to adjust supply and help stabilize the market in the event of disruptions.

Even in a severe scenario where Iran's oil production capacity is effectively sidelined, the broader supply landscape remains capable of adjustment. Iran accounts for roughly 4 percent of global oil production, ranking ninth worldwide. Although this share is significant, it can be compensated by other major producers if necessary.

Reclaiming oil pricing power: Middle Eastern autonomy in a shifting war

The core leverage in global oil pricing still resides in the Middle East, where low production costs and significant spare capacity provide enduring influence. In contrast, production costs in other major oil-producing regions, particularly in North America, are substantially higher, as much of the region's output comes from shale oil, which involves more complex and technically demanding extraction processes.

The critical question now is whether oil output levels in the Middle East remain subject to US coordination—or whether producers in the region are gradually moving toward more autonomous, self-directed negotiation.

Historically, the United States has served as the de facto coordinator of the global oil market. Washington's long-standing "divide and rule" strategy in the Middle East has effectively prevented regional producers from forming a unified negotiating bloc.

In recent years, however, this balance of influence has begun to shift. While many Gulf states still host US military bases, internal political dynamics increasingly reflect a gradual but noticeable drift away from Washington's strategic priorities.

The Israel–Iran conflict could accelerate this shift and emerge as a geopolitical turning point. Whether Middle Eastern producers can reclaim more genuine control over oil pricing remains a critical trend to watch.

Middle Eastern countries now face critical questions: Will continued US support for Israel erode Washington's influence among Gulf producers? Is the traditional US alliance still capable of shaping the region's narrative? Will Saudi Arabia step forward as a more assertive and independent leader within OPEC?

If Middle Eastern producers move toward greater autonomy in managing oil production, a key question arises: what objectives might drive their pricing decisions?

Two contrasting scenarios could emerge, each with distinct implications for the course of the Israel–Iran conflict:

If producers coordinate to reduce supply and push prices higher, this would bolster oil-exporting nations' revenues and reinforce Iran's financial capacity to sustain a prolonged conflict. At the same time, it would complicate US efforts to control domestic inflation.

Conversely, if competition among producers drives prices downward, it would generally favor the US and apply economic pressure on Iran. However, should prices fall below the break-even cost of US shale production, American oil producers would also face significant losses.

Conclusion: The unseen battlefields dictate

Oil remains the critical economic lifeline and leverage point in the prolonged Israel–Iran war, far beyond its immediate market fluctuations. Subtle shifts in the balance of power behind oil pricing could reflect an underlying realignment of geopolitical influence in the Middle East, with consequences that will shape the broader conflict environment. Ultimately, the true test of a protracted war lies in economic resilience and diplomatic maneuvering—the unseen battlefield where lasting outcomes are forged.