Oil Prices Expected to Surpass $110 Amid Iran Threats of Military Action
Crude oil prices are expected to explode above $110 today, after Iran warned of “serious consequences” for the United States for conducting direct airstrikes on its nuclear facilities, causing a deep escalation in the Iran-Israel conflict.
Analysts fear the situation could worsen today, posing unprecedented risks to global oil markets and the world economy if Tehran does indeed respond with military action, according to a CNBC report. Iran’s foreign minister said Tehran has “left all options open” to protect its sovereignty.
In early Asian trading, US West Texas Intermediate (WTI) crude rose more than 2% to $75.22 a barrel, while global benchmark Brent crude climbed nearly 2% to $78.53 a barrel.
Threat to Close the Strait of Hormuz – Global Oil Supply Chokepoint
Tehran's parliament has approved a proposal to close the Strait of Hormuz – a vital oil shipping route that accounts for nearly 20% of the world's total oil supply.
“This is different, with a series of missile launches over a week, plus direct U.S. involvement,” said Andy Lipow, president of Lipow Oil Associates. If Iran takes military action or disrupts oil shipments through the strait, oil prices could spike.
“Even minor disruptions to tankers could send oil prices close to $100 a barrel,” warned Saul Kavonic, senior energy analyst at MST Marquee. If the strait were to close completely for weeks, a military response from the West would be inevitable to reopen trade. The biggest risk is that a long-term disruption could quickly deplete supplies.
Bob McNally, president of Rapidan Energy Group, said Iran’s military response could go beyond a naval threat. If energy facilities in the Persian Gulf were attacked, oil prices would not stop at $100. “A prolonged disruption or destruction of key energy infrastructure could push oil prices above $100,” he warned. At the same time, the conflict could last “longer than the two previous Gulf Wars.”
Goldman Sachs Predicts Shocking Oil Price Spike If Situation Continues to Worsen
Analysts at Goldman Sachs point out that the impact of US airstrikes on Iran has increased the likelihood of a serious energy supply crisis.
In a report led by Daan Struyven, if oil flows through the Strait of Hormuz were to drop by 50% in just one month, and then remain at a 10% decline for nearly a year, Brent crude could hit $110 a barrel in the short term.
If Iran’s oil exports fall by 1.75 million barrels per day, oil prices could hit $90 a barrel, the bank predicts, although it does not see a complete supply cut as likely.
Goldman Sachs also noted that the United States and China will have strong incentives to prevent prolonged supply disruptions. However, they acknowledged that “the risk of supply disruptions and the risk of higher energy prices have increased.” This is a signal for the market to prepare for higher energy prices.
Widespread Impact on European Natural Gas Market
Not only crude oil, but also the European natural gas market is at risk of extreme volatility. Goldman Sachs warns that TTF gas futures could rise to 74 euros/MWh, equivalent to about $25/million BTU – close to the peak of the energy crisis in 2022. If the disruption persists, gas prices could spike to 100 euros.
Vanda Insights CEO Vandana Hari said most traders remain cautious, watching for further Iranian reactions. “The situation is quite complex, and investors will be cautious and not panic unless there is more evidence,” she said. However, no one can ignore the tense developments.
The Strait of Hormuz – the shipping route that connects the Persian Gulf to the Indian Ocean – is a vital artery for the global energy system. A real or threatened closure would delay shipments, trigger panic buying and create wild price swings. The global oil market has just entered a period of extreme risk, with Iran’s next move in the game.
Source: https://tintucbitcoin.com/dau-co-the-tang-den-110-usd/
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