The price of oil could double: expert explains the threat of closing the Strait of Hormuz

Blocking the Strait of Hormuz could lead to the worst-case scenario for the global energy market. Iran is effectively blocking a third of the world’s oil supplies, threatening a sharp jump in oil prices – up to $100–120 per barrel. This, in turn, will hit consumers, stock and currency markets, and only strengthen Russia’s position.

Leonid Kosyanchuk, former president of the Association of Oil Product Market Operators and CEO of SunOil network, told UNN about this.

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In conjunction with US and Israeli strikes, the closure of the Romanian Strait is the worst-case scenario for the global energy market.

He explained that Iran is a powerful oil state that had “approximately 20% of global oil exports.” And almost a third of the world’s oil passes through the Strait of Hormuz, and its closure will cause panic on stock markets and oil exchanges.

He predicts that this will lead to a large imbalance between supply and demand in the oil market. The price of oil will increase due to a change in the cost of delivering this oil. If the strait is blocked, the consequences will not be long in coming.

I think that in the nearest future, literally tomorrow or the day after tomorrow, we will see futures growing very quickly. They react not only to such significant events, but even to some statements by state leaders

According to the expert, if the strait is blocked, not only futures but also the physical price will increase. And this increase can be extremely significant.

Today, no one will tell you specific figures. However, approximately, I can say that the price of oil, and not only futures, but also the physical price, can rise to 100-120 dollars per barrel. And this is a catastrophe for our consumer. Because if in Europe, for example, a consumer spends from 5% to 12% of their earnings on gasoline, fuel, then here it is more than 50%. I think that the Ukrainian oil product market will feel this by the end of the month. And then it will get even worse

He also added that these events could be reflected in the currency markets, meaning they could cause significant fluctuations.

I think that with the currency, things will not be as stable as they have been until now. A worse scenario for developments in the eastern region, well, frankly, it’s hard to even imagine

In turn, Russia will only benefit from such a turn of events, if, as Kosyanchuk notes, “toothless United States will continue to drag out sanctions against Russia’s shadow fleet.” In addition, according to him, China and India, where “these supplies of Russian oil are directed,” will also benefit.

And accordingly, there is a difference between $50 per barrel and $100-120, you know? That is, Russia will be in the black, accordingly

At the same time, energy expert Hennadiy Ryabtsev insists that Iran will not be able to realize its threat to close the strait.

In the short term, quotations will rise. After all, this message is an excellent reason for exchange speculators to play on an increase. However, as it becomes clear to market participants that the Iranian threat cannot be realized, quotations will go down again

AdditionThe Iranian parliament has approved the closure of the Strait of Hormuz. Now the final decision must be made by the Supreme National Security Council of Iran. The decision to close the strait, through which about 20% of the world’s oil and gas demand passes, is not yet final.