We should all be expecting the price of oil to continue to rise, as the Strait of Hormuz remains closed. Global oil supplies are being hindered, and if the cost-of-living crisis wasn’t bad enough, it looks like it’s about to get much worse.
Crude oil, gasoline, diesel, jet fuel, natural gas, petrochemicals, power, and fertilizer prices have all risen sharply since the conflict began.
The narrow shipping lane, known as the Strait of Hormuz, between Iran and Oman, remains closed. This lane is the one through which around a fifth of the world’s daily oil and liquefied natural gas (LNG) supply passes. The closure is threatening to cause economic pain to the everyday human almost everywhere on the planet.
Top Middle East oil producers Saudi Arabia, Iraq, and Kuwait have all cut production at their oilfields because they have to pump oil into storage if they cannot load it onto oil tankers, accoridng to a report by Reuters.
Most investigative journalists agree that this is going to cause a massive economic impact, harming those who have nothing to do with the ruling class’s war mongering.
The halt to oil and gas shipments through the strait is the nightmare scenario for the global energy system and represents one of the most serious disruptions to energy supply ever suffered. –Reuters
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The International Energy Agency is planning to recommend the release of 400 million barrels of oil, the largest such move in IEA history, to help absorb the shock.
Damage to oil refineries in Iran due to air strikes is also playing into the rise in costs. Even if the war is somehow ended soon, repairs to the refineries will take time. It could be months before some return to normal operations.
Now That Iran Has Closed The Strait Of Hormuz, How High Will The Price Of Oil Go?