Global fears of rising oil prices amid Houthi threats to the Strait of Hormuz
Tensions are escalating in the Middle East, especially as the war in Gaza continues. Eyes are on the Strait of Hormuz, a vital shipping lane for Gulf oil and facing increasing threats that could affect global oil prices.
Tensions in the Middle East:
The region is witnessing an escalation in hostilities, as the Iran-backed Houthis attacked a US warship and three commercial vessels, foreshadowing the escalation of the conflict to other areas, which may include the Strait of Hormuz.
The importance of the Strait of Hormuz:
The Strait of Hormuz is one of the narrowest and most strategic sea points in the world, it is only 20 miles wide and about a fifth of the daily supply of crude oil and liquefied natural gas passes through it.
Previous effects on oil prices:
The Strait has been closed twice in the past, in 1973 and 1979, which led to a 300% rise in oil prices, which had a negative impact on the world economy.
The current situation of oil prices:
After an initial rise in Brent crude prices to more than 90 dollars per barrel, prices experienced a decline to less than 80 dollars per barrel.
Iran's position and possible influences:
Iran is one of the key players in the region, and it has a lot to lose in the event of the closure of the Strait, especially with its oil exports to China reaching record levels.
Possible alternatives:
There are pipelines in other places that may mitigate the impact of the blockade, such as the Saudi east-west pipeline, but there will still be an impact on about 2 to 4 million barrels per day of crude oil.
Markets are looking at the threats optimistically, but the situation could change quickly as the fighting continues and the conflict escalates, leaving more than a tenth of global crude oil supplies at risk.
