Conflict in the Middle East could inflame oil markets
With tensions between the United States and Iran escalating after the recent US strikes on Iran's nuclear facilities, global oil markets are on the cusp of a crucial week. Geopolitical developments in the Middle East, especially threats to close the Strait of Hormuz, are the most important factor in determining crude price trends, as the Strait passes almost 20% of global oil supplies daily, according to market analysis.
Strait of Hormuz: the disaster scenario that the world
fears The closure of the Strait of Hormuz remains the most alarming threat, as there are no alternative routes capable of compensating for this vital artery.
Although the Iranian parliament approved measures to close the Strait, the final decision is tied to the approval of Supreme Leader Ali Khamenei, and Goldman Sachs estimates that closing the Strait may push the Brent price to 110 dollars per barrel temporarily, if flows halve for a month.
But this scenario remains a double-edged sword for Iran, as its oil exports, which are a vital source of its revenue, are completely dependent on the Strait.
Thus, any blockade could cause serious damage to Tehran's economy before it affects world markets.
China is in the crosshairs of influences
China, the largest importer of Iranian oil, will be one of the most affected if the Strait is closed. With Beijing heavily dependent on Gulf oil, it could face disruptions in energy supply chains, adding to global inflationary pressures.
The increase in shipping costs by 90% since the start of the conflict also multiplies the risks of increasing the prices of logistics chains.
Geopolitical risk premium
Even without closing the Strait, the ongoing military escalation raises the risk premium in oil prices. Brent has jumped 13% since tensions began on June 13, while WTI is up more than 10%.
Some analysts predict that the price of a barrel will exceed 100 dollars if the conflict expands to include US energy facilities or military bases in the region.
A fateful week for global energy
With the ongoing missile exchange between Israel and Iran, and the anticipation of Tehran's reaction to the US strikes, the oil market remains in suspense.
Between the scenarios of a catastrophic closure of the Strait and a rise in prices to record levels, or the containment of the crisis and the return of prices to their usual levels, it seems that the last word will be politics, not economics.
In the end, while the markets are trying to absorb the repercussions of each development, oil liquidity and supply stability remain the biggest bet for consumers and producers alike in the coming days.
