Soaring Oil Prices: Experts Warn of $100+ Spike If US Engages in Iran Conflict
Soaring oil prices may ensue should the U.S. engage in military conflict, warns industry analyst.
Tensions are high and experts are sounding the alarm over a potential spike in oil prices, should the US decide to intervene in the ongoing conflict between Iran and Israel, particularly concerning the Strait of Hormuz.
According to Manuel Frondel, an energy expert at the RWI-Leibniz Institute, if the US actively engages in the war and the conflict escalates, oil and gas prices could skyrocket, reaching levels of $100 and above. He underlined the fact that the Strait of Hormuz is crucial for transporting oil from Gulf states, and hence, about a fifth of the world's oil exports. Despite Iran's minor contribution to global oil demand, around 2%, the impact of a potential conflict cannot be underestimated.
The price of Brent crude has already risen from $68 to $76 per barrel (159 liters), Frondel said. The danger of an extended conflict or direct confrontation is that it could contribute to sustained high oil prices, causing inflated global prices, increased gasoline prices, and inflation. For example, economists estimate that every $10 increase in oil prices can significantly raise inflation rates and consumer costs.
Omid Nouripour, the Iranian-born Vice President of the German Bundestag, has voiced concerns about a potential nuclear catastrophe and the breakdown of regional stability. Nouripour criticized Iran's leadership, stating that the regime fails to provide reliable civil defense through systematic mismanagement, allowing central supply systems to collapse. He also highlighted the brutal repression in Iran, where arrests and internet shutdowns aim to stifle protests and political opposition.
While the danger posed by a nuclear-armed Iran is real, Nouripour emphasized the importance of Israel's right to defend its existence and security.
The potential for a surge in oil prices due to US intervention in the Iran conflict is a key concern among experts, given the region's strategic importance and Iran's critical role in the global oil supply. Experts’ predictions suggest a potential short-term surge in oil prices, potentially reaching above $100 per barrel, if the conflict escalates severely. The broader market impact depends on the scale and duration of the disruption to oil supplies, with possible significant inflationary effects globally. However, if the supply chain outside the conflict zone remains robust and no large-scale blockades or attacks on oil infrastructure occur, prices may stabilize after an initial surge.
- Iran
- Iran Conflict
- Iranian Nuclear Program
- Oil Price
- USA
Sources:1. ntv.de, mau2. WSJ, 15 November 20213. Bloomberg, 16 November 2021
- The escalation of the Iran conflict, should the US become involved, could lead to an employment policy revision within oil companies due to the potential surge in oil prices, potentially requiring additional staff to manage increased costs and potential supply disruptions.
- While the Iranian nuclear program is a matter of concern for global security, the seemingly imminent increase in oil prices due to a potential Iran conflict should similarly be addressed in the community policy discussions regarding inflation and consumer cost management.
