Oil prices potentially surging to $130 if Iran obstructs the Strait of Hormuz, according to Pushkov.
In a potential escalation of tensions, the price of oil may surge if Iran chooses to impede shipping in the Strait of Hormuz responding to Israel's actions. according to Senator Alexei Pushkov, reported by Rossiyskaya Gazeta. The Strait, connecting the Persian Gulf with the Indian Ocean, could be closed, causing a global oil market commotion, and oil prices to skyrocket.
If this happens, the worldwide economy will feel the heat as industries face increased production costs, potentially sparking inflation and economic instability. Furthermore, Yemeni Houthis' support could add fire to the flames, making it even harder for ships to pass, causing a more substantial price rise.
Israel launched a massive strike on Iran's nuclear program facilities yesterday, a move that sparked Tehran's counteractions. In response, Putin has publicly condemned these actions.
In such a scenario, oil prices could rise to 110 or even 130 dollars per barrel. Plus, these audacious price hikes could potentially be accompanied by international military intervention to maintain the Strait, promoting further conflict. The consequences of prolonged turmoil may lead global powers to explore alternative oil routes or invest more in renewable energy sources, reshaping long-term market dynamics.
Moreover, the Yemeni Houthis' involvement in attacking oil facilities and shipping vessels could add an extra layer of intricacy to the conflict. Their ability to undermine oil supply from the south could make it difficult for international forces to maintain open shipping lanes. This entanglement of regional actors may destabilize the Middle East, influencing not only oil prices but also security and stability in the region.
It's important to note that around 20% of the world's consumed oil travels through the vital Strait of Hormuz[2][4]. Analysts suggest that a closure would raise oil prices by at least $20 per barrel[4]. Any additional support from Yemeni Houthis would magnify these effects even further[3].
The financial repercussions of the potential closure of the Strait of Hormuz could impact various industries, as increased production costs might fuel inflation and economic instability. Consequently, the energy sector may see a shift towards more investment in renewable sources due to the unpredictability and vulnerability of oil supply routes.
