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Page added on March 25, 2012
Global oil price may hit $240 if Iran closes Hormuz
Analysts at IHS Global Insight also told reporters that Iran can easily close the strategic strait and disrupt global oil supplies for up to three months by laying mines that the US and its allies would have to find and remove, USA Today reported.
“If Iran actually moves to close the Strait of Hormuz, crude oil prices may soar to $240 a barrel for some time,” said Sara Johnson, senior research director for Global Economics at IHS.
She added that oil prices may stay as high as $160 in the second quarter of the year before reverting to somewhere around $120.
Such an oil shock, Johnson stated, can bring back gas lines in much of the world, and shave next year’s global economic growth to 2.6 percent from a current forecast of 3.6 percent.
“If it [oil price] did hit $240 [a barrel], you’re looking at about a doubling of where gas prices are now; and the US [gas price] is at $4 [a gallon],” said Jim Burkhard, managing director of the global oil group at IHS CERA, the firm’s energy-research arm.
The expert stated that the impact would be so large as the global oil supplies are so tight.
“The world has only between 1.8 million and 2.5 million barrels per day of unused production capacity, down from 6.2 million in 2009. Tight inventories magnify the impact of any interruption in crude from nations around the Strait [of Hormuz],” Burkhard added.
The US and the European Union (EU) have imposed tough sanctions against Iran, since the beginning of 2012, to block the country’s oil exports and penalize other states for importing the Iranian crude.
They claim that Iran’s nuclear energy program includes a military component, ignoring the fact that International Atomic Energy Agency has never been able to prove a military diversion in Iran’s nuclear energy program despite meticulous inspections.
Tehran has threatened that if Iran’s oil exports are cut, the country may take retaliatory steps, including the closure of the strategic Strait of Hormuz through which a daily total of 15-17 million barrels of oil pass.
Press TV
8 Comments on "Global oil price may hit $240 if Iran closes Hormuz"
MrEnergyCzar on Sun, 25th Mar 2012 3:09 am
Think about what happens when the world’s spare capacity is zero….
MrEnergyCzar
BillT on Sun, 25th Mar 2012 4:08 am
PressTV…ok…so what is new here?
I personally think it will not stop at $240. Nor will it be cut just 3 months. Nor will the economy only shrink by 1%. Those are best scenario numbers, I think. And MrEnergyCzar, I think we are already at zero spare capacity other than a few tankers sitting around and the strategic reserves of a few countries.
It is going to be a long, hot, interesting summer.
DC on Sun, 25th Mar 2012 4:42 am
The amerikans are ones that seek to close the straight, not Iran. Iran would only try if pushed and its not even clear they would succeed if they wanted to. Irans entire military budgets is 1% of the amerikans and even one of those so-called super-carrier battle groups costs more than Iran spends in an entire year. The idea the amerikans keep pushing that Iran is some kind of miltary super-power is laughbale. We heard the same thing about Iraq. Remember those stories the amerikans told about the 50 or more infantry divisions Iraq had? Or the vast #s of scud missiles? OR how fearsome the so-called Republican Guard was? None of it was true and the RG was a joke. The US media make them out to like they were some modern day Arab 1st SS panzer division. Not even close.
The Iranians might not be as hopless as the Iraqis where, but they still only spend 1% of what there bullying enemy does. And that does count for something, even if the US corporate mercs Navy and Air Force are only good at killing people that cant fight back.
BillT on Sun, 25th Mar 2012 5:48 am
DC, does dollars spent mean the same where the dollar buys much more than in America? After all, China has a smaller military budget than the Us also, but, then they pay their workers in the arms factories a small percentage of what American’s make. So, their ‘dollar’ buys a lot more. You put down a country because it doe not spend?
Think what we spent in Iraq. They could take out a million dollar vehicle with $20 worth of explosives. Who won? They did. The Us is bankrupt, they are not. We did eave them with a lot of spent radioactive munitions pieces laying around to kill for the next hundred years, but they still got us out.
Did you forget that Iran has two junk yard dogs that may not take kindly to our messing up their arrangements with Iran. Our banker, China and Europe’s winter heat, Russia. We cannot win a war with Iran in the air. It will take the deaths of many thousands of American ground pounders to even try.
And if they take out a carrier or two with a few million dollar missiles, what then? They may just have that capability. But then, sinking a tanker or two in the channel out of the Gulf is all it would take to bring the West to it’s knees. A year or so without 20% of the world’s oil would collapse everything, and at that point, what would Iran have to lose? Nothing.
PETE on Sun, 25th Mar 2012 7:03 am
Under international rules of war the US and Europe have both already declared war.
Just like ww2 when US forced Japans hand by starving them. Again though, I think they have made a huge mistake in underestimating the response. At first Iran will do nothing and keep selling/trading less oil for more. the Usreali response will be to attack, my guess Jul.-Aug. there will have to be full invasion for forced regime change as Irans leaders know. They will attack back but not so much upon the military as the oil infrastructure, Red sea Caspian sea and Gulf. They will take their 20% uranium and have it positioned to be injected into all fields oil and gas. South pars gone forever? World population drops to half a billion in ten years, boy what a Nostradamus I am.
BillT on Sun, 25th Mar 2012 8:59 am
Pete, you thought of a few twists even I missed…lol. But, the rules are off when this happens. We have no way of knowing how many or where the sleeper groups are positioned or what havoc they can do in many countries, including the Us. After all, we have many thousands of Iranians living in the Us as Citizens. Of the 8,000,000 or so Muslim American Citizens,possibly 2 million are Shiites, so if even 1/100% are militant, that would make 200+ possible ‘terrorists’ at large here. Take down a few sections of the power grid, poison some water supplies to major cities, blow up a few interstate bridges, etc. The next war will not be just nicely uniformed armies with set lines of defense. It will be like no war ever seen.
Cam on Sun, 25th Mar 2012 3:29 pm
Let’s not forget that the Iranians had the smarts to steal one of our most advanced stealth drones by actually taking it over in flight. They found the stuxnet virus which was suppose to be undetectable. The design for stuxnet is now out of the bag. Recently scientist have found a way to make bird flue easily transferable from person to person. Do you think maybe the Iranians are smart enough to also figure that one out. And how many more? Today the name of the game is asymmetrical warfare and I doubt very much that the United States has a lock on that one.
Arthur on Mon, 26th Mar 2012 8:50 am
DC, same thing with Vietnam, but the US lost, despite huge differences in military budgets. Come to think of it, Somalia, Lebanon, same story. Bill Lind has written interesting stuff about fourth generation warfare.
http://www.lewrockwell.com/lind/lind-arch.html
The decisive factor is morale, not budget. As soon as the US puts ‘boots on the ground’ the clock starts ticking against the US, timesheets of expensive contractors are filled in and huge bills start coming home, all at the expense of the already battered US taxpayer. The muslim goatherd does not have a timesheet, he merely has a mobile phone, whose button he needs to press so the IED explodes at the very moment the APC passes, filled with 20 year old’s from Arkansas, listening to Lady Gaga on their iPods, after which he can return to his goats, smilingly. And if the goatherd gets killed, he will receive a warm reception by Allah. The kids from Arkansas do not have a clue what they are doing in the desert and want to go home.
@Pete, during WW2 Japanese were put into concentration camps. Could happen to muslims as well in the worst case scenario.