The largest U.S. military buildup since the 2003 Iraq invasion is aimed at Iran, and the outcome of a tense standoff could mean the average price at the pump falls to $2.50 per gallon or spikes astronomically to $5 in the case of war, geopolitical and energy analysts told Fortune.
The reason for the extreme range of potential impacts is the Strait of Hormuz offshore of Iran. The narrow, 104-mile strait is the main choke point separating the Persian Gulf—and the daily flow of nearly 20 million barrels of oil—from the Indian Ocean and global energy markets. Most of the crude oil from Saudi Arabia, Iraq, Iran, Kuwait, and the United Arab Emirates must pass through the strait.
“The stakes are so high,” said oil forecaster Dan Pickering, founder of the Pickering Energy Partners consulting and research firm. “The biggest risk to a disruption would be from Iran if they’re backed into a corner and have nothing to lose.”
Source: fortune
4 Comments
Good. Price shocks and volatility are needed as long as their are idiots buying new SUV’s.
You just *know* Trump will do price freezes. And then shortages follow.
Remember that the President has the authority to ban export of crude oil from the US. Currently the US is exporting a lot of crude.
Ban the US export, and oil stays cheap in the US, while it goes through the roof everywhere else. This will also help his friends in Russia, while it will hurt Europe and China. Win-win-win for Trump.
And since the rest of the world prefers sweet crude, while many US refineries are set up for Venezuelan and Canadian heavy crude, he could allow barrel-for-barrel swaps to get the mix right. (At market price both ways, of course, pocketing the difference in his Qatar bank account.)
Now, Trump is very sensitive to the opinions of the oil majors here, but also very sensitive to the opinions of the MAGA crowd. I have no idea which way he will swing here.
Best guess: If “campaign contributions” from the oil majors are larger than what he is able to collect from the MAGA faithful, he will act in their favor.
That will bump up the prices of used EVs.
But it has to happen. You can’t have the Trump-Epstein Scandal headlining the news each day. War is about the only thing that will knock it out.