The US-Israeli attack on Iran is threatening a major economic catastrophe for the world economy. Energy experts have estimated that if the Strait of Hormuz is blocked, oil prices could reach $150 per barrel.
“If half of the fuel supply through the Strait of Hormuz is also cut off, if the U.S. Navy can’t take the tankers guard, the price of refined oil can go up to $150 per barrel, and we can see it,” Ed Harss, a lecturer at the University of Houston, told Al Jazeera.
We are already seeing the impact of the LNG market. Prices rose more than 40 per cent on the first day of the attack. Natural gas prices in European countries have nearly doubled since Monday.
In addition to oil, the price of diesel has also increased at an unusual rate. Many countries have already started stockpiling petroleum as an alternative to gas, which is affecting future energy orders in some U.S. states.
“This situation will have a serious impact on the states of New England,” he warned. If this happens, the situation will be extremely hostile to President Trump in domestic politics.” Explaining the reason, he said, the midterm elections are ahead. It is not unusual for the election to have an impact.
Why the Strait of Hormuz is so important
The Strait of Hormuz is a narrow waterway between Oman and Iran, which connects the Persian Gulf to the Gulf of Oman and the Arabian Sea. It is called the most important oil transit choke point in the world. The main reasons for this are that about 20 percent of the world’s total oil produced and about one-third of the sea-borne oil passes through this narrow path. This is the main path to major exporters such as Saudi Arabia, Iraq, Kuwait and the United Arab Emirates.
On the other hand, almost all of the liquefied natural gas (LNG) supplied to the global market from Qatar passes through this system. Gas prices in Europe are currently playing a major role in the world.
There are very few pipelines as an alternative to this system and their capacity is also limited. As a result, the closure or disruption of this path means the hurdle of fuel around the world.
According to economist Ed Hars, although supply is slightly disrupted, the price of oil could rise to $150 per barrel, which will increase inflation and transportation costs around the world.
Source: Al Jazeera