Approximately 26% of the world’s gas and oil supplies cross the Strait of Hormuz, and the US-Israeli-Iranian confrontation has destabilized global energy markets. Although the US and Iran have expressed a desire to begin peace negotiations, no date has been scheduled as of yet. Dan Jorgensen, the European Commissioner for Energy, has stated that “even the best-case scenario is bad,” while the IMF has cautioned that the dispute might send the world economy into recession. He said, “Bank of America believes we have two scenarios.” “We might see oil drop to about $75 or $77 per barrel if the trade agreement is successful, negotiations continue, and the truce is extended. “Oil will remain at its current price until the end of the year if the war continues and we don’t see any progress escalation even by mid-May.” “We start to see those structural supply issues come in and we start to see an oil spike if it goes past mid-May.” “Some analysts believe it will be $151, $205, or $255.” Imposed economic penalties on Russia following its invasion of Ukraine. Approximately 26% of the world’s oil and gas flows through the Strait of Hormuz, despite Russia providing just 11% of the global gas supply. It implies that the Iranian conflict may have significantly greater negative economic effects. Dr. Browne said, “It’s the ships that are currently in transit that would be arriving, the ability to replace our stocks, everything kind of coming together and just causing supply chain issues that cannot be resolved in the short to medium term.” “That would result in a tremendous supply shock that goes beyond what we’re currently experiencing, which would cause it to spike.” Theoretically, the expenses would be transferred to drivers in the absence of any government involvement, and the cost of gasoline would potentially treble at the pump. In reality, the government would probably step in, as it has done twice since the start of the crisis. But it would turn out to be quite costly.
