Iran still has an outsized ability to rattle global energy markets.

Markets don’t reopen until Monday but the $10 rise in the price of a barrel of oil since the start of the year is a reminder of how seriously traders take any threat to the country, even though years of US sanctions mean Iran’s oil exports are no longer a big part of the world’s supply.

The main source of concern in the market is IranIts shipping influence in the Strait of Hormuz, through which oil and gas must pass to its Gulf neighbors, and its sponsorship of militias throughout the region that can launch attacks on energy infrastructure.

“It’s very difficult,” said a senior energy trader, as he considered how to navigate the fallout from Iran’s air strikes on Israel and the US on Saturday. “Targeted attacks could result in chaos and there is potential for further (price) increases because there is a lot of uncertainty.”

Last year, every jump in the price of oil during the short war between Iran, Israel and the US followed by a sale, as traders are betting there is little chance of regime change in Tehran, or broader instability.

But that calculus has shifted, with growing fears that the US will seek to overthrow the Iranian regime, a scenario that raises the risk of conflict spilling over across the Middle East, and significant disruption of energy flows.

How important is Iran to the world’s energy supplies?

Iran has the fourth largest proven crude oil reserves in the world woolbut years of sanctions and low investment have hampered its exports.

The country pumped 3.45mn barrels a day (b/d) of oil in January, according to the International Energy Agency, less than 3 percent of global supply.

Almost all of its exports go to China, mainly to independent refiners in Shandong province who are willing to buy the permitted oil at a steep discount. Iranian crude accounted for nearly 13 percent of China’s seaborne oil imports last year, according to Kpler, an energy data firm.

During last year’s conflict, Israel attacked Iranian fuel depots but stayed away from other energy infrastructure. Because of its shallow coastline, Tehran is extremely vulnerable: almost all of its crude oil flows from an export terminal, Kharg Island, 15 miles offshore in deep water. In recent days, the terminal has ramped up its exports and depleted crude oil inventories.

But the loss of Iranian barrels will not, by itself, lift the market. With global supply set to exceed demand in the first half of this year, the impact is expected to be limited.

“In the current context, the markets could absorb it if oil disappeared tomorrow,” said Richard Nephew, a former US deputy special envoy for Iran, who is now at Columbia University’s Center on Global Energy Policy.

Tehran does not want to stop the flow of crude except in the most extreme circumstances, said Dan Marks, an energy security research fellow at the Royal United Services Institute.

“The regime is hanging on by a thread and if you add the stoppage of oil exports, it’s a big blow.”

Iran also exports natural gas to neighboring countries, including Turkey and Iraq, but these flows are often interrupted. Supplies to Iraq were recently halted due to what Tehran described as technical problems, while gas trade with Turkmenistan increased after disputes over unpaid bills.

How will Iran disrupt the world’s energy flow?

About 21 million barrels of oil from Iran, Iraq, Kuwait, Saudi Arabia and the United Arab Emirates pass through the Strait of Hormuz every day. Iran has repeatedly threatened to close the chokepoint and laid mines across the waterway during the 1980s.

Helima Croft, an analyst at RBC Capital Markets, said if Tehran feels the US is serious about regime change, the response could be dramatic. “We think there is a significant risk that the two rounds between Tehran and Washington will be wider and more disruptive than the 12-day war in June,” he said.

He added that during a recent visit to the Middle East “many well-placed observers have warned that Iran is likely to look at targeting energy facilities and other key economic assets to force Washington to stop”.

The nephew added: “Their thinking is: ‘If we are not allowed to have an energy system, neither will you.'”

Still, Marks says Tehran has few good options. “If the economy is healthy and the regime is strong, it can stop exports or close the Strait of Hormuz. You can just say you put mines, or fire some missiles, and then shipping will stop. No one wants to kill their crew,” he said.

“But what is the end game? The world can withstand a crisis for a few weeks, but there will be more military action, their neighbors will be unhappy, the currency will increase and you will have the risk of hyperinflation.”

Tehran can also call on a network of militias across the Middle East to disrupt oil production, exports or shipping.

What will happen to the price of oil?

Traders remain relaxed about the long-term impact of the confrontation, pointing to a number of supply alternatives and uncertainty over the scale and duration of any conflict.

Iran’s output could be offset by higher production from Saudi Arabia or by drawing on storage in the event of a brief disruption, said UBS’s Giovanni Staunovo.

Members of OPEC, the oil producer group, are scheduled to meet this Sunday to discuss their output for April.

Analysts expected OPEC to increase production by 137,000 b/d, but a person close to the situation suggested that OPEC could increase three or four times that to calm the markets.

Meanwhile, a senior trader said the industry is used to re-arranging energy flows and is preparing for disruption around the Gulf.

“You build too much flexibility there, and you know you have to change cargo routes,” they said, adding that the industry successfully faced the shocks of the Covid-19 pandemic and from the whole Russian invasion of Ukraine.

Brent crude rose as much as 3 percent on Friday to hit a seven-month high of $73 a barrel, and has risen nearly 12 percent in the past month as expectations of conflict have risen.

David Fyfe, chief economist at Argus, highlighted the knock-on effects on Chinese refiners, which have benefited from cheap crude from Russia, Venezuela and Iran. Any shortfall in supply could push them into more expensive grades in the Middle East, squeezing margins.

That pressure could be a political bargaining chip between Washington and Beijing. “Trump is aiming his crossbow at Beijing,” Fyfe said. “The big question is whether he follows through.”

How important is oil to Iran’s economy?

Iran’s leaders have long insisted that the country must wean itself off oil. Supreme Leader Ayatollah Ali Khamenei has repeatedly criticized the dilapidated state of the sector and warned that dependence on oil has made Iran vulnerable to external pressure.

“Running our country on oil revenue leaves us at the mercy of the world’s major policymakers,” he said in 2014, urging diversification to “become immune to the influence of the powers that be”.

But the country remains “too dependent” on oil revenue, said Pag-umangkan. “They have a few little things here and there, but this is it, the main export industry after all these years.