The West Asia situation is stuck in a spiral that is spinning out of control. On Saturday, probably for the fifth time after threatening Iran with perdition, US President Donald Trump called off his planned attack which was aimed at Iran’s infrastructure. “I have agreed, for the future benefit of the WORLD and, likewise, the survival of a successful and prosperous Iran, to cancel the attack, subject to being able to rapidly make a DEAL,” the president wrote on his Truth Social account.He said he had done so, at the instance of Iran itself and other Middle-eastern countries and because the “perimeters of a deal had been agreed to.” According to him, it would involve the “Immediate, Complete, and Total OPENING OF THE HORMUZ STRAIT, and an end to Iran’s nuclear threat.” Just how much truth there is in that last sentence is a matter of conjecture.Illustration: Pariplab Chakraborty.Iran has clearly established a mutual deterrence with the US and it is thereby able to shape American calculations despite the enormous damage it has suffered from US-Israeli bombing since the outset of the war. Notably, Iran has been able to threaten the global economy through its ability to threaten two critical chokepoints, the Hormuz that it is directly controlling and with the Houthis restricting Saudi traffic in the Bab-el-Mandeb.According to Axios, Crown Prince of Saudi Arabia Mohammed bin Salman spoke to Trump earlier on Saturday expressing concerns over the American plans. Other regional powers had also pressed the US and Iran to de-escalate. Other reports say that MbS speaking on behalf of the GCC made two implicit warnings: First, that the destroyed GCC would be forced to shift their economies away from the US and the west and second, prohibit the use of their air space and logistical facilities to the US.“Any hostile action by the U.S. or Israel – or participation or cooperation by regional countries in such actions – would be met with a decisive and proportionate response from Iran’s powerful armed forces,” Iran’s foreign minister Syed Abbas Araghchi said to Saudi Arabia’s Foreign Minister Prince Faisal Bin Farhan Bin Abdullah Al Saud, per a post on Araghchi’s Telegram channel.Earlier through its Fars News Agency Iran had laid out the cost of a US attack bluntly. It had announced that were the US to undertake attacks on Iranian energy infrastructure, it would strike the world’s most important energy facilities, located in Arab countries and Israel, all within range of Iran’s precision missiles. Fars laid out seven targets: Ghawar Oil Field, Saudi Arabia, backbone of Saudi production, whose disruption would put 3.8-5 million bpd, nearly 5% of world oil supply at risk. Abqaiq and Khurais, Saudi Arabia, , the world’s largest oil stabilization plant with throughput of 7 million bpd. These were facilities also hit in the September 2019 drone/missile attack. Ruways Refinery and Zakum Oil Field, UAE, 2nd largest offshore oil field the world, with 1 million bpd production capacity. North Ghadir Gas Field and Ras Laffan LNG, Qatar, world’s largest gas field with 10-14% of proven reserves, 20% of global LNG trade. Ras Laffan is Qatar’s LNG export hub. Burgan Oil Field, Kuwait, is the second largest conventional oil field in the world with 70 billion barrel of reserves while production is around 2 million barrels per day. Sitrah Refinery Bahrain that was also hit earlier in a drone strike and the Al Mihaj facility. Leviathan and Tamar Gas Fields, Israel, Israel’s largest and 2nd largest gas fields.The warning was quite explicit. A destruction of Iran’s facilities would result in the devastation of the region’s oil infrastructure. And oil is not the only target, the US has planned attacks on Iranian power plants, grids and water plants. Teheran in turn will retaliate across the GCC area.What’s already occurredThe war that opened on February 28 hit Iranian oil/gas facilities directly (Kharg Island, oil depots in Tehran and Alborz, the South Pars field on March 18) and Iran retaliated against Gulf energy infrastructure – most significantly the retaliation March 18–19 strikes on Ras Laffan Industrial City in Qatar, damaging sections of the facility that provides one-fifth of the world’s LNG supply.QatarEnergy has said parts of the plant will take up to five years to repair. Bahrain’s Sitrah refinery was hit twice, most recently in March 2026. By late March, the IEA head put the tally at 40 oil and gas facilities across the region severely damaged.Market mechanics – March- JulySo far the market has reacted to the closure of Hormuz which has been a soft one, with some traffic still going through. But overall it was affected because insurance became unavailable or seafarers refused to go through. Traffic fell from some 100-135 vessels a day to as low as 2-10 in the recent weeks. This is estimated to be in the range of 10-15 million barrels per day (bpd). In this period oil prices have ranged between $64-144 per barrel. A great deal of this was because China reduced its oil purchases and the 400 million barrels of strategic reserves that were released into the market by IEA countries.This validates the thesis that Iran doesn’t need a nuclear bomb to hold 20% of world oil hostage – degrading confidence in the strait’s safety does the job just as well, and does it faster than a nuclear weapons program ever could.The futureBut there are no estimates, in terms of production loss or market prices, of the worst case scenario of the destruction that could take place if the US attacked Iranian energy infrastructure and Iran retaliated.Damage in Ghawar/Abqaiq-Khurais here doesn’t just remove barrels – it removes the swing capacity that’s supposed to backstop a Hormuz disruption, something that would be devastating in itself.An attack on Ras Laffan already struck earlier and with a five-year repair estimate will result in an LNG shortfall that could go beyond a decade. Asian buyers like Japan, South Korea and India who lack the storage buffers of Europe would be badly hit. Israel, too will be affected by a strike on its gas fields as well as the exports to Egypt.For India specificallyThe exposure runs on three tracks: crude (Gulf sourcing plus the fact that India has kept importing sanctioned Russian barrels partly because Gulf supply became less reliable), LNG (India’s long-term contracts are disproportionately Qatari), and diaspora/remittances (the Gulf hosts the largest share of the Indian expatriate population, so any GCC-state-level escalation has a human as well as economic dimension). India has taken steps to go in for US crude, diversification away from Qatar LNG and continuing Russian purchases could well become structural. But even here dangers lurk such as the threat of 100 % tariffs on Russian purchases being proposed in a US Bill.As of now it would be foolhardy to predict a durable settlement. Even one that takes place now that will not immediately set things right. The impact of the war, risk-pricing, the “Gulf as unreliable” feelings will ensure that pre-war routing will not normalise quickly.But the consequences of a continuing conflict and the possibility of wider damage to the oil infrastructure will throw off even these calculations. No one has really modelled what could happen if Ghawar or Abqaiq took a hit on top of the Hormuz closure.Let us be clear about one thing. Any attack on energy infrastructure violates the Geneva Conventions Additional Protocols I and II whose purpose is to define the difference between military and civilian facilities. The US has signed them but failed to ratify them.The real danger is no longer that Iran and the United States will deliberately choose an energy war. It is that both have created a deterrence relationship in which every attempt at coercion carries the risk of triggering one. Once oil fields, LNG terminals and desalination plants become instruments of strategy, the conflict ceases to be a regional war. It becomes a global economic crisis. That, more than the fate of Iran’s nuclear programme, is what should concern policymakers today.The circle cannot be squared, listen to Trump’s language and it suggests that he will be only satisfied with an Iranian surrender. But Teheran is in no mood to oblige and has shown uncommon resilience. For them the battle is existential, just as it is for the continuation of the US global hegemony.Manoj Joshi is a distinguished fellow with the Observer Research Foundation.This piece was first published on The India Cable – a premium newsletter from The Wire – and has been updated and republished here. To subscribe to The India Cable, click here.