ING forecasts oil prices will reach $150 if Iran seals the Strait of Hormuz.
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Markets are concerned about the US military's attacks on Iran's nuclear facilities, which are compounded by those carried out by Israel, especially due to their impact on the commodities market, especially on oil. The reason? The country has considered closing the Strait of Hormuz, through which 20% of the world's oil and gas transits . This decision, if implemented, would lead to a sharp rise in the price of crude oil and, therefore, global inflation.
Thus, ING predicts that if Iran implements such a closure, the price of oil could skyrocket to $120 in the short term, and in the event of a prolonged interruption (until the end of 2025), it will likely exceed $150 per barrel, reaching new all-time highs. However, Warren Patterson, head of Commodity Strategy at ING Research, warns that while Iran may find it necessary to retaliate against US attacks, "blocking the Strait of Hormuz could be excessive," as the impact on Asia would be greater than on the United States, which could upset countries like China, in addition to the effect on Iranian oil itself, which also passes through Hormuz.
Thus, it notes that "the bombing of Iranian nuclear facilities by the United States over the weekend significantly increased supply risks for the oil and natural gas market." Therefore, it emphasizes that "an effective blockade of the Strait of Hormuz would cause a drastic change in the oil outlook, pushing the market into a deep deficit ." Furthermore, OPEC's spare production capacity would not be helpful in this situation, since "most of it is located in the Persian Gulf, and its flows would also have to pass through the Strait of Hormuz."
Given this situation, and according to the ING expert, governments would be forced to coordinate the release of oil from strategic reserves, which would only be a temporary solution, while the increase in prices would boost drilling activity in the US, but this additional supply will take time to reach the market and its volumes will not be sufficient to compensate for the losses through the Hormuz.
Thus, Patterson believes that Monday's price developments suggest that the market doesn't believe (at least not yet) that flows through the Hormuz will be blocked. In fact, the Brent crude oil price soared nearly 6% this Monday, reaching $81.40, although it subsequently lost momentum and is now trading virtually flat, around $75.40.
Markets are concerned about the US military's attacks on Iran's nuclear facilities, which are compounded by those carried out by Israel, especially due to their impact on the commodities market, especially on oil. The reason? The country has considered closing the Strait of Hormuz, through which 20% of the world's oil and gas transits . This decision, if implemented, would lead to a sharp rise in the price of crude oil and, therefore, global inflation.
El Confidencial
