Oil Prices Will Go Into The Stratosphere In August
- Jul 30, 2018 -

Supplies and transportation will be disrupted

Experts say if the United States is really desperate to attack Iran, it will have a huge impact on the oil market, not only on Iran's oil supply, but also on oil transportation in the Middle East.

Earlier this month, rouhani hinted that Iran might disrupt oil shipments to neighboring countries in response to the coming U.S. sanctions, as well as trump's demand that all countries stop buying Iranian oil, al-jazeera said Wednesday.

"The strait of hormuz is either safe for everyone, or it is not safe for everyone," Iranian army commander mohammad javad hidalli said Tuesday.The move comes a day after Iran's supreme leader, ayatollah ali khamenei, said he supported blocking all oil exports from the region by closing the strait of hormuz, even if Iranian crude exports were banned.

Middle East oil producers such as Saudi Arabia, Iraq, Qatar and the united Arab emirates use the strait of hormuz to transport crude oil.About a third of the world's seaborne oil trade depends on the strait of hormuz.

If conflict breaks out, oil prices will jump

Oil prices are likely to soar in a short time if a U.S. -iran shock erupts.

Goldman sachs forecasts brent at between $70 and $80 a barrel.Goldman sachs believes that Saudi Arabia's increased production and the possible release of U.S. strategic reserves could undermine further price increases, but the coming supply disruption in Iran could lead to a severe shortage of oil, which could hit 600,000 barrels a day in November.

Merrill is more bullish and expects brent crude to rise to $90 a barrel in the second quarter of 2019."We believe that a complete cut-off of Iranian crude exports is difficult to achieve but could lead to a spike in oil prices above $120 a barrel," the bank wrote in a report in early July.For now, uncertainty about U.S. policy will lead to a reduction in Iran's exports.

The rise in oil prices may not be a desirable outcome for the us and Opec, which decided last month to increase production to stabilize prices, which could wipe out the organisation's previous efforts.

For the United States, with midterm elections looming, Mr. Trump is even less willing to see oil prices rise.Bernard Baumohl, an economist at Economic Outlook Group in Princeton, estimates that a one-cent increase in gasoline costs consumers $1 billion a year.That is why Mr Trump has repeatedly pressed Opec to keep prices down.