Brace Yourself for Skyrocketing Oil Prices: Expert Warns of Catastrophic Spike if US Joins War with Iran
Escalation of conflict in the US could potentially inflame global oil markets, driving up oil prices significantly.
While Iran may not be a major global oil supplier, energy experts caution of a potential price explosion for energy in the event of US engagement in the conflict between Tehran and Jerusalem, especially considering the Strait of Hormuz as the chokepoint.
If the US gets involved in the Iran-Israel war, oil prices could skyrocket beyond $100: "Should the US actively participate in the conflict and it escalates, oil and gas prices could surge dramatically, as they already have following Israel's attack on Iran last week," says Manuel Frondel, energy expert at the RWI-Leibniz Institute, to the "Rheinische Post." "Steep oil price increases above $100 are plausible in an escalation. This is also contingent on how long the conflict lasts and whether the Strait of Hormuz is blocked during the conflict."
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The price of the Brent grade has already risen from $68 to $76 per barrel (159 liters), Frondel noted. The expert underlined: "Via the Strait of Hormuz, the transport of Gulf states and thus approximately a fifth of the world's oil exports passes. Iran itself plays a minor role, as it only meets two percent of the world's oil demand."
Nouripour Worried About Possible Nuclear Disaster
Omid Nouripour, the Iranian-born Vice President of the German Bundestag, once again called for de-escalation amid the war between Israel and Iran. "The stability of the entire region is at risk, and the consequences of a conflagration would be unquantifiable, also for Israel," the Green politician told the German Press Agency (dpa). "Now is the time for de-escalation. Furthermore, the danger of potential radioactive leakage having disastrous effects on humans and the environment far beyond Iran is real."
He also denounced the Iranian leadership. "The population lives in constant anxiety due to the regime's refusal to establish reliable civil defense through widespread mismanagement and intentional degradation of critical supply systems," Nouripour told dpa. "Simultaneously, the Iranian government is intensifying its brutal repression: arrests and internet shutdowns are increasing to snuff out protests and political opposition in their infancy."
The threat posed by a nuclear-armed Iran is real, the Member of the German Bundestag emphasized. Moreover, one must never forget: "The destruction of Israel has been the Iranian state doctrine since 1979, and Israel has the right to defend its existence and security."
It's worth noting that the U.S. entering the conflict could potentially lead to West Texas Intermediate (WTI) and Brent crude prices spiking to around $120 per barrel, according to forecasts[1][3]. This waterway, crucial to handling nearly a third of global seaborne oil trade and about 20 million barrels on a daily basis, roughly one-fifth of global consumption[1][3], is a main concern if the Strait of Hormuz is disrupted.
Even before a full-scale escalation, oil prices could rise by around $5 per barrel, potentially pushing crude oil prices to $80 per barrel in response to strikes on energy sites and production facilities linked to the conflict[2]. The oil market, already near multi-month highs, would likely become highly volatile if the U.S. intervenes or if Iran targets oil tankers or attempts to close the Strait of Hormuz[1][2].
funds: - danger - unrest - instability - oil_price - oil_market - resources - conflict - Iran - U.S. - Israel - nuclear - diplomacy
enrichment: Here are some key takeaways from enrichment data for better understanding the potential impact on oil prices and the market:
- Price Surge Potential: Oil prices could jump dramatically, with predictions suggesting West Texas Intermediate (WTI) and Brent crude prices might reach approximately $120 per barrel if the conflict disrupts supply through the Strait of Hormuz[1][3].
- Shorter-Term Increases: Even before a full-scale escalation, oil prices could rise by around $5 per barrel, potentially pushing crude oil prices to $80 per barrel in response to strikes on energy sites and production facilities related to the conflict[2].
- Market Volatility: The oil market is already volatile and near multi-month highs, likely to become highly volatile if the U.S. intervenes or if Iran targets oil tankers or attempts to close the Strait of Hormuz[1][2].
- Key Risks and Concerns: a. Disruption of Shipping Lanes: The main concern is not just Iranian oil exports but the broader risk to oil shipments through the Strait of Hormuz, where any disruption could halt a significant portion of global oil exports, causing severe supply shortages and price shocks[1]. b. Targeting of Energy Infrastructure: The conflict has escalated to attacks on oil and gas production facilities and refined product depots, increasing the risk of more extensive damage and supply interruptions[2]. c. Market Psychological Impact: While some analysts believe both Iran and Israel might avoid directly attacking critical oil export infrastructure to prevent escalation, even a single incident could rapidly destabilize markets and drive prices much higher[3]. d. Broader Economic Consequences: Oil prices at or above $120 per barrel would severely impact global economies by triggering widespread demand destruction and increasing fuel costs for consumers and industries worldwide[3].
- The community policy should include measures to mitigate the potential economic consequences of increased oil prices due to a war-and-conflicts like the potential war between US and Iran, particularly in terms of employment.
- As the Iran-Israel conflict escalates, the politics surrounding the US's potential involvement and Iran's nuclear capabilities should be closely monitored, as they have significant implications for employment policies, given the potential effects on general-news such as resources, unrest, and instability.
