Middle East Crisis Oil Market

Expert: Then discontent and hyperinflation are a risk

It is difficult to assess the economic consequences of this weekend's attack on Iran, according to several analysts that the Financial Times spoke to. In the short term, the market can compensate for the loss of Iranian oil production. The big question is where the conflict will go and whether Iran will respond with attacks on oil facilities in the Middle East.

– They reason that “if we can’t have an energy system, you can’t have one either,” says Richard Nephew of Columbia University’s Center for Global Energy Policy.

Dan Marks, who works at the British think tank Royal United Services Institute, believes that Iran has several options available to it. One of them is to close the Strait of Hormuz. He believes that the world economy can withstand a crisis that lasts for a couple of weeks without any problems.

– But if there were to be more military activity, dissatisfaction would grow among neighboring countries, currencies would skyrocket and hyperinflation would be a risk, Marks tells the FT.

Iran reportedly closing Hormuz: “No ships are allowed to pass”

Iran has closed the Strait of Hormuz, which is important for oil trade, according to Reuters. The Revolutionary Guard has announced over the VHF marine communication system that “no ships are allowed to pass,” according to an anonymous EU source from Operation Aspides.

Such a move could, according to Bloomberg calculations, have enormous consequences for the price of oil on the world market. The news agency’s economists believe that a closure could push the price of crude oil above $100 per barrel – from the current level of around $70.

There has been no official confirmation from Iran that traffic through the strait is closed.
 

Data shows: Traffic jam outside the Strait of Hormuz – oil tankers have stopped

A large number of oil and fossil gas tankers appear to have stopped on their way into the Strait of Hormuz on Saturday afternoon, hours after the US and Israel launched their offensive against Iran.

Data from the website Marine Traffic shows that ships have stopped just outside the strait, on their way into the Persian Gulf.

Bloomberg interprets the data as shipping lines pulling the brakes and looking for other shipping routes. The news agency spoke to five shipowners who all said they were frantically considering other options.

An unnamed manager at a commodities trading desk told Reuters that their ships would be “grounded for several days.”

The Strait of Hormuz is often described as the lifeblood of global oil and gas transport, as the narrow strait is the main route from the Middle East to the rest of the world. A quarter of the world’s seaborne oil is estimated to pass through the strait each year. 

Expert: Iran strongest opponent since the 1950s

Iran is the strongest opponent the US has faced since the 1950s. This is what international law expert Cecilie Hellestveit, working at the Norwegian University of Science and Technology, tells the Norwegian newspaper DN after Saturday's attacks on Iran by the US and Israel.

- This is the biggest war that the Americans have started in several generations. Iran is the strongest military opponent that the Americans have gone to war against since North Korea in the 1950s, she says.