From late February to April, U.S. airstrikes primarily targeted Iranian military assets, including missile bases, drone storage facilities, command centers, and air defense systems. However, since military operations resumed in July, the nature of U.S. targets has shifted considerably.

New Feature 1: U.S. Strategy Shifts from Military Targets to Civil Infrastructure

The United States has begun systematically targeting civilian infrastructure in southern Iran. Officials from several Iranian provinces reported airstrikes on bridges, railways, airports, communication towers, and desalination plants. The attacks have been particularly concentrated in Hormozgan Province along the Strait of Hormuz. Six bridges have reportedly been destroyed, disrupting road access to Bandar Abbas, while 116 communication towers have been damaged, causing widespread communication outages.

The strategic objective appears clear: weakening Iran's ability to control the Strait of Hormuz.

Middle Eastern media outlets, including Al Jazeera, believe the strikes are intended to isolate southern Iran, particularly Bandar Abbas—the country's largest commercial port and a critical naval base for both the Iranian Navy and the Islamic Revolutionary Guard Corps (IRGC). Mark Hilborne, Senior Lecturer in Security Studies at King's College London, noted that targeting bridges is designed to disrupt Iran's ability to transport military equipment to its southern region, thereby reducing its operational control over the strategic waterway.

The expansion of U.S. strikes from military installations to civilian infrastructure marks a significant shift in military strategy. By targeting transport networks along the Strait, Washington aims to sever IRGC supply lines and weaken Iran's logistical capabilities.

New Feature 2: The Conflict Is Expanding Beyond the U.S. and Iran

Another defining characteristic of the latest escalation is the widening geographical scope of the conflict. Desalination plants have emerged as new targets.

Iran announced on July 18 that a U.S. airstrike on a desalination facility in Hormozgan Province cut off drinking water supplies to approximately 10,000 residents across 20 nearby villages.

Meanwhile, Kuwaiti authorities stated on July 19 that one of the country's power generation and desalination plants was struck by Iranian attacks for a second consecutive day, forcing multiple generating units offline.

For Gulf nations, the implications extend far beyond military concerns. Due to extremely limited freshwater resources, Gulf countries depend heavily on desalination. Around 90% of Kuwait's drinking water comes from desalination, with Bahrain and Qatar relying on it even more heavily.

Environmental experts cited by Al Jazeera warned that strategic water reserves in Kuwait, Bahrain, and Qatar are relatively limited. Significant damage to desalination infrastructure could therefore threaten both social stability and economic activity.

Roxane Farmanfarmaian, Lecturer in International Politics at the University of Cambridge, suggested that U.S. strikes on Iranian desalination facilities prompted Iran to retaliate against similar infrastructure in Kuwait, using the country as an example to demonstrate its retaliatory capabilities.

The conflict is increasingly evolving from a bilateral U.S.-Iran confrontation into a broader regional confrontation.

Early on July 20, Kuwait's military reported intercepting hostile aerial targets entering its airspace. Bahrain and Jordan also activated their air defense systems against Iranian missiles and drones. Israel reported detecting Iranian missile launches toward Jordan and fired multiple interceptors, with debris landing near southern Israeli cities.

New Feature 3: Iranian Missiles Are Becoming More Effective Against U.S. Air Defenses

Iran's recent missile attacks appear to have achieved significantly higher success rates. On July 18, U.S. Central Command confirmed that two American service members stationed in Jordan were killed and another remained missing following Iranian missile and drone attacks. According to sources familiar with the matter, the targeted U.S. air base was protected by the THAAD missile defense system and had previously withstood multiple Iranian attacks without casualties.

U.S. officials now acknowledge that Iran has begun adapting to American missile defense systems.

One anonymous U.S. official stated that Iran is deploying highly maneuverable, high-speed missiles capable of altering their flight paths to strike critical targets with greater precision. Other officials told U.S. media that the growing damage from recent Iranian attacks suggests Iran still possesses substantial missile inventories and that its weapons are becoming increasingly capable of penetrating U.S. defensive systems.

This indicates that the military balance between the two sides is evolving. While the U.S. has improved the precision of its strikes inside Iran, Tehran is responding with increasingly effective missile attacks.

What Does This Mean for Oil Prices?

The immediate bullish driver for oil prices is straightforward: the global inventory buffer has largely disappeared.

According to a research report released by China International Capital Corporation (CICC) on July 20, the most significant difference between the current Strait of Hormuz disruption and the first shutdown earlier this year is the sharp decline in global oil inventory buffers.

By the end of the second quarter, OECD oil inventories had fallen from just 1% below the five-year average in late February to 8% below the average, representing a cumulative drawdown of nearly 300 million barrels.

Strategic petroleum reserves contributed around 200 million barrels of that supply, easing pressure on commercial inventories. U.S. inventories alone declined by approximately 160 million barrels, while crude inventories at the Cushing storage hub have fallen to historically low levels, leaving limited room for further releases.

In addition, during the temporary reopening of the Strait in June, much of the cargo buffer built up in the Gulf region was already depleted.

CICC therefore believes that the short-term risk premium for crude oil is now significantly larger than during the first Strait closure. If the waterway remains blocked for an extended period, markets may need to reassess the possibility of an extreme global inventory shortage.

Recent price movements support that assessment.

Oil prices surged 9% on July 13, marking the largest single-day gain since May 2020. Early on July 20, Brent crude jumped another 3%, climbing above US$91 per barrel.

Many market participants now believe oil prices could return to the elevated levels seen before the United States and Iran signed their previous memorandum of understanding. Analysts at Securities Times also noted that if tensions continue to escalate, Brent crude could rise toward US$90 per barrel or higher.