The eye of the oil market to the Strait of Hormuz

According to Energy Press, some analysts predict that in the event of disruptions, the price of oil may reach $350 per barrel, and any problems in the Strait of Hormuz can have serious effects on the liquid natural gas market. The escalation of tensions in the Middle East is one of the The world’s most vital energy crossings, namely the Strait of Hormuz, has put it in the forefront of global attention again. This region is known as a strategic point due to its role in transporting crude oil around the world.
The closure or disruption of the oil flow of this strait can have wide consequences on the global energy markets and lead to a significant increase in oil prices. The Strait of Hormuz, one of the vital arteries of the world oil market, is located between Iran and Oman and is known as one of the narrowest and main oil transportation passages. This strait connects the oil producers of the Middle East to the global markets, and at the same time, it is considered the main route for the transfer of oil from major producing countries such as Saudi Arabia, Kuwait, Iraq, and the UAE to the markets of Asia, Europe, and America. According to statistics published by the US Energy Information Administration (EIA), in 2022, about 21 million barrels of crude oil passed through this strait daily, which is equivalent to 21% of the world’s oil trade. If the flow of oil in this strait is stopped or disrupted for any reason, the consequences can quickly show themselves in the global oil prices. Even a temporary disruption could raise transportation costs, cause widespread oil supply delays, and dramatically raise global energy prices.
“Worst Case” Scenario
Currently, the tension between Israel and Iran has made the risk of disruption in this strait more serious, after the escalation of conflicts, many analysts are worried that Iran’s oil infrastructure will be attacked. According to Alan Golder, an energy analyst at Wood Mackenzie, if the Strait of Hormuz is closed, the price of oil can reach over $100 per barrel. He pointed out that the world markets have not yet reflected the worst possible scenario in the prices and have focused their attention only on the possibilities. Golder has warned that if Iran decides to disrupt the movement of oil through the Strait of Hormuz, this action can raise the price of oil to $150 per barrel.