How an Israel-Iran Conflict Could Send Oil Prices Soaring

[Social Media]

 

A potential conflict between Israel and Iran could have a massive ripple effect on the global oil market. Following Iran’s launch of 180 missiles toward Israel, concerns are mounting that oil prices, already climbing, could skyrocket. The economic consequences would be severe, with rising petrol prices likely leading to higher inflation, and for the U.S., posing a serious threat to Kamala Harris’s election campaign.

 

The immediate impact was already felt, with oil prices surging 5% in just two days, reaching $76 per barrel. This marks a shift from the steady decline that had been occurring since April. Bjarne Schieldrop, chief commodities analyst at SEB, suggests that further escalation could easily push oil prices to $100 per barrel. Reports indicate that Israeli officials are considering a “significant retaliation” that may target Iran’s oil refineries, which would further exacerbate market tensions.

 

The rising prices come at a critical time for the U.S. election. Schieldrop notes that voters will likely perceive high oil and gasoline prices as a reflection of the Biden-Harris administration's inability to manage the Middle East crisis. This could strengthen the Republicans' argument that the Democrats are failing on both foreign policy and economic stability. “Voters will see high oil prices and high gasoline prices reflecting that the Biden-Harris administration is not able to control the situation in the Middle East, it will make them look weak,” says Schieldrop. 

 

High oil prices will hit U.S. consumers particularly hard compared to the U.K., where taxation makes up a larger portion of fuel costs. In the U.S., a 10% increase in oil prices translates directly into a 10% jump in gasoline prices, making the impact more visible and financially painful for Americans. Schieldrop adds, “More Americans live from hand to mouth, on the margin. If they suddenly have an additional outlay for gasoline, they are extremely hurt.”

 

Republicans are poised to use any price spike to argue that the Democrats cannot be trusted to manage the economy or global conflicts. Prominent Republican donor Harold Hamm, a U.S. shale magnate, recently criticized the Biden administration for leaving the U.S. vulnerable to a Middle Eastern oil price shock, attributing the vulnerability to Biden’s decision to release oil from the U.S. strategic petroleum reserve.

 

Meanwhile, Israel’s actions appear to be independent of U.S. influence. Schieldrop suggests that Israeli Prime Minister Benjamin Netanyahu may not be concerned with how high oil prices could harm Kamala Harris’s election chances. “Israel is not listening to the U.S. whatsoever. Maybe Netanyahu thinks that Donald Trump is a stronger supporter of him and he won’t mind high oil prices hurting Kamala Harris,” Schieldrop said.

 

As tensions rise, the potential for a larger conflict looms. While Iran’s 1.56 million barrels of oil per day represent just 1% to 2% of global demand, if the conflict intensifies, analysts worry about a more significant disruption—specifically, Iran’s capacity to block the Strait of Hormuz. This narrow passage between Iran and Oman is crucial for global oil supplies, as 20% to 30% of the world’s oil passes through it. Schieldrop warns that if Iran were to block the Strait, oil prices could soar to unprecedented levels. “That would be a worst-case scenario, but then the oil price would go ballistic,” he says. In such a case, prices could even reach $200 per barrel.

 

With so much at stake, the global oil market remains on high alert, as even small escalations could trigger massive economic consequences. The uncertainty surrounding the Israel-Iran conflict underscores the fragility of energy markets and the far-reaching impacts of geopolitical tensions.

 

Based on a report from: Daily Telegraph 2024-10-04

 

 

 

[RichardColeman]

I can see already the owners of Thai Airways thinking how they can even more inflate their prices

[Srikcir]

3 hours ago, Social Media said:

“Voters will see high oil prices and high gasoline prices reflecting that the Biden-Harris administration is not able to control the situation in the Middle East, it will make them look weak,”

Unlikely.

America is now a net exporter of fossil fuels at a time when global conflicts have led to increased prices.

US is independent of OPEC oil price increases. US gasoline prices if and when US refineries owned by Saudi Arabia (thanks to son-in-law Kushner and then POTUS Trump who pushed for the sale) try to price gouge the US consumers, the government has the authority to mitigate such an event.

That's not to say other countries may suffer higher prices.

[JonnyF]

Unlikely IMO.

 

Either way, Israel has no choice but to defend itself and it's citizens against these attacks. 

[still kicking]

49 minutes ago, RichardColeman said:

I can see already the owners of Thai Airways thinking how they can even more inflate their prices

Nonsense

[john donson]

does your little brain allow you to think it might actually be big oil's plan from the beginning?  more profits... 

 

like the... russian exploded the gas pipeline, and who sold US gas at 3x the russian price ?

[Yagoda]

6 minutes ago, john donson said:

does your little brain allow you to think it might actually be big oil's plan from the beginning?  more profits... 

 

like the... russian exploded the gas pipeline, and who sold US gas at 3x the russian price ?

The Ukrainians blew that pipeline.

 

Oil prices may spike short term if the heroes of the IDF take out Irans oil terminal since the Indians and Russians and Chinese will have to go on the open market, but they will drop immediately upon Trumps election

[Peterphuket]

3 hours ago, RichardColeman said:

I can see already the owners of Thai Airways thinking how they can even more inflate their prices

I bought already my tickets for the next year,I'm not worried.