Global Tensions Rise as Middle East Conflict Threatens Oil Prices
The entire world is keeping a close eye on the Middle East conflict due to its direct implications on the price of a barrel of oil. While there are currently at least 20 armed conflicts underway, they are largely going unnoticed because they don't have significant economic weight.
The latest estimates come from the prestigious Goldman Sachs bank. Yesterday, it published a report stating that oil prices could surge by $20 per barrel if Iranian production is affected by Israeli retaliation. In terms of production, this would reduce the global supply by 1 million barrels per day, assuming the OPEC+ cartel does not react to compensate for the shortfall.
If major OPEC+ members, such as Saudi Arabia and the United Arab Emirates, compensate for part of the production losses, the oil markets could benefit from a more moderate price increase, slightly below $10 per barrel.
For its part, Iran could retaliate by blocking the Strait of Hormuz, a critical waterway through which approximately one-fifth of the world's daily oil production passes. This strategic waterway connects Middle Eastern oil producers to major global markets. This is another risk for the market, as it would impact production costs and global prices.
Stay tuned, as this development will have far-reaching implications for the global economy.
