Oil prices continue to rise amid Israel-Iran saber rattling

The prospect of an all-out war in the Middle East rose after Iran launched a massive missile attack on Israel on October 1.

Israel has threatened retaliation, fueling concerns about a disruption to the flow of oil and gas from the energy-rich region.

Global oil prices have already risen 9 percent since Iran’s attack, which came amid Israel’s year-long war in the Gaza Strip and its invasion of southern Lebanon earlier this month.

A full-scale conflict between Israel and Iran could change international energy supplies and send shockwaves throughout the global economy, experts warn.

“Major disruption to regional oil and gas exports could have a material impact on the global economy,” said Farzan Sabet, research associate at the Geneva Graduate Institute.

“Act of Aggression”

Israeli media reports suggest the country could target Iran’s nuclear sites or its oil or gas facilities.

US President Joe Biden ADVISED Israel against striking oil facilities in Iran, one of the world’s largest producers. Iran has warned that any attack on its infrastructure would “provoke an even stronger response” from Tehran.

If Israel carries out a major attack against Iran’s oil or gas facilities, Tehran could “resort to exerting pressure on important transit points such as the Strait of Hormuz,” Sabet said.

Iran has threatened for years to block the strategic Strait of Hormuz, through which a fifth of the world’s oil supplies pass.

“The Strait of Hormuz is critical to the global economy,” said Neil Quilliam, an energy policy and geopolitics expert at the Chatham House think tank in London.

Qatar, one of the world’s largest producers of natural gas, also uses the Strait of Hormuz for its exports.

There is also concern that Tehran could target oil facilities in neighboring countries if attacked by Israel. Iraq, Kuwait, the United Arab Emirates, Saudi Arabia and Iran are among the world’s largest oil-producing states.

Iranian President Masud Pezeshkian, during a trip to Qatar last week, met with senior officials from the Gulf Arab states. Officials searched quiet Iran of their neutrality in the conflict between Tehran and Israel, according to reports.

Sabet said any Iranian retaliation against a possible Israeli attack affecting global energy prices or trade would be “targeted as an act of aggression and lead to further pressure on Iran.”

Quilliam said Israel would hit targets that would “hurt the Iranian regime and affect the country’s economy” rather than affect global oil markets.

“Feel the rising prices”

In recent decades, there have been major increases in energy prices following the 1973 Arab oil embargo and the 1979 Islamic revolution in Iran.

These events led to major gas shortages in some countries and endless lines for drivers filling up their cars.

But experts said even a major disruption to the flow of oil and gas from the Middle East as a result of an all-out Israel-Iran conflict would not send the global economy spiraling out of control. This is largely due to the rise of the United States as a major supplier of oil and gas, as well as the decline in global dependence on fossil fuels.

“Western consumers will feel the price increase at the pump,” Sabet said. “(But) it will be much less than it would have been in a previous era.”

He points out how repeated warnings about the disruption of trade in the Red Sea by Iran-backed Houthi rebels in Yemen have not led to significant consumer inflation in the West.

But Sabet says a major disruption to the flow of oil and gas from the Middle East would have “a huge effect” on the Chinese economy.

Beijing imports about 1.5 million barrels of oil per day from Iran, accounting for 15 percent of its oil imports from the region.

Sabet said rising energy prices for China would “trickle down the supply chain to the manufactured goods the country exports to the United States, Europe and elsewhere” and could lead to “more inflation for consumers”.

Via RFE/RL

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