Global Oil Prices Surge as Iran-US Conflict Escalates
The recent conflict between Iran and the US has resulted in two major energy supply disruptions. The first, the Strait of Hormuz blockade, is now being joined by a second choke point: the Bab el-Mandeb Strait on the Red Sea. According to Mohammad Baqer Ghalibaf, Iran's Parliament Speaker, if their security is not ensured, no infrastructure will be safe.
The Houthis, allied with Iran, have closed the Bab el-Mandeb Strait and launched missile and drone strikes on two Saudi Arabian oil tankers in the Red Sea. This has led to a significant increase in international oil prices, with Brent crude breaking past the $100 per barrel threshold and West Texas Intermediate (WTI) jumping to nearly $92 a barrel.
Market analysts warn that if the dual blockades persist through the quarter, a global economic slowdown or recession is a distinct possibility. Goldman Sachs analysis predicts that Brent might exceed $120 a barrel in the fourth quarter and average $100 next year if the Strait of Hormuz remains disrupted through 2027.