Iran’s parliament has recently approved the potential closure of the Strait of Hormuz, a strategic waterway critical for global oil transit, following U.S. military actions against its nuclear sites. Experts warn that this move could heavily backfire on Iran, risking animosity with neighboring oil-producing countries and jeopardizing its vital oil exports. Approximately 20% of the world’s oil passes through the strait, highlighting its significance in global energy markets.
Analysts, including Vandana Hari from Vanda Insights, believe the likelihood of Iran actually closing the strait is very low. Disrupting oil flows could provoke hostile actions from neighboring nations and harm Iran’s own economy, especially as China, which accounts for a large portion of Iranian oil exports, would be adversely affected. Andrew Bishop of Signum Global Advisors echoed this sentiment, noting that Iran has much to lose by antagonizing China, given the latter’s reliance on stable oil supplies from the Gulf.
Any closure could lead to significant price increases, impacting consumers and markets worldwide. Patrick De Haan from GasBuddy suggested that U.S. pump prices could rise substantially if tensions escalate. A report from S&P Global indicated that closing the strait could significantly reduce oil exports not just from Iran, but also from key Gulf countries, potentially removing over 17 billion barrels from global markets.
Given the limited alternative routes for oil and gas from the Middle East, any major disruption could inflate energy prices dramatically, with Goldman Sachs predicting a potential spike in Brent crude to around $110 per barrel if supplies were significantly curtailed. Thus, while Iran’s threats may be intended as leverage, the consensus is that the risks to its own standing and economy may outweigh any potential benefits.
Note: The image is for illustrative purposes only and is not the original image associated with the presented article. Due to copyright reasons, we are unable to use the original images. However, you can still enjoy the accurate and up-to-date content and information provided.
