He Strait of Hormuz It is the link between the Persian Gulf and the ocean, a river of oil which irrigates the world with 20.5 million barrels per day, or nearly 27% of all international maritime trade in this type of product. Geopolitical tension, and in particular the red button on the zone controlled by Iran, can block this area and bring oil back above $100.
This weekend not only Iran attacked Israel, but it is officially confirmed that the local conflict in Gaza has reached regional status in the Middle East. Markets are now turning to the Strait of Hormuz, where many major oil producing countries have access to the sea: Saudi Arabia, Kuwait, Iraq, United Arab Emirates, Qatar and his Iran.
The price of oil in the short term
The weekend’s bidding war had already been anticipated by the markets, with increases last Friday. Today they responded calmly, tight price stabilityto the theoretical stagnation of the conflict, but the increases do not contract, the Brent It’s still $90. Regarding the trade in general merchandise, the freight price is rebounding, even if it is still far from its December values, and much further from the peaks it reached just after the pandemic.
The scenario, at least as of Monday April 15, maintains the moderate optimism of the political and economic class. Josu Jon Imaz, CEO of Repsol, expects the escalation to stagnate and believes “that the markets are interpreting this today.” This is the majority diagnosis, and also shared by Carlos Body, Minister of the Economy, who promises “continuous monitoring and surveillance” of the situation.
What is at stake
What would happen if Iran decided to press the red button and close the Strait of Hormuz? This would mean cutting off the transit of 20.5 million barrels per day of petroleum products, or practically 27% of this maritime trade, according to the latest report. EIA data of the first half of 2023.
Closing the passage to oil tankers would mean cut off access to the ocean to Iraq, Kuwait and Qatar, and much of the coastal area of the United Arab Emirates. Saudi Arabia would also be affected, but could still count on its western coast, on the edge of the Red Sea.
Such a conflict would mean a immediate rise oil prices, unless countries like the United States put their oil reserves on the market, which Joe Biden could do in the United States “if he intends to keep the price of crude oil at a limited level for his electoral campaign” until next fall, he said. . Rafael Noguera, professor at EADA Business School.
Exhibition in Spain
If the conflict spreads to more countries and extends over time, “we could talk about a surge in prices,” Noguera argues, and in this scenario all Western countries would be hit hard.
Among all these countries, Spain would be one of those that would best absorb the blow, given its energy diversification thanks to “solar panels, wind energy, regasification installations…”, defends Santiago Carbó, university professor at the University of Valencia and director of the financial area of Funcas. This has a direct impact on gasoline and diesel pumps, which are already benefiting from rising oil prices.
As for the goods, the price of freight of ships bounce back according to the stock market index which quantifies it, the Baltic Dry Index. However, the Spanish government, through the words of Luis Planas, Minister of Agriculture, believes that “the situation is stable”.
On the other hand, the Bank of Spainin its spring report on financial stability, expresses its concern about the conflict and fears in particular that “if it affects traffic across the Strait of Hormuz, it ends up disturbing more intensely to the global economy.