Drone attacks on pipelines in Saudi Arabia and the mysterious alleged sabotage of tankers near Fujairah sent pulses racing, but a phony war in the Persian Gulf failed to trigger a feared triple-digit surge in crude prices. A hot war, however, between the US and Iran could be an entirely different matter. Tehran has repeatedly threatened to shut down the Strait of Hormuz in the event of an outright conflict with America and its Arab allies. The chokepoint is an obvious target. Over 18 million barrels of oil are shipped daily through the 21-mile-wide channel that separates the Islamic Republic from the Arabian Peninsula. In 2008, worries that Iran would blockade the strait helped to send oil prices skyrocketing to a record $147/b, a level not achieved since. “A hot war in the Gulf, especially prolonged closure of Hormuz or severe damage to [the giant oil processing facility of] Abqaiq, would send crude prices well into the triple digits,” said Robert McNally, president of Rapidan Energy Group and former advisor to President George Bush. “That price spike would slam growth, crush oil demand, and trigger an oil price reversal to the low double digits.” Abqaiq could be the Achilles’ heel… continue reading
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Source: CTRM Center