There’s at least a 50-percent chance that the rising tension between the United States and Iran could escalate into a conflict that would disrupt supplies, Fereidun Fesharaki, a former energy advisor in Iran in the 1970s and now chairman at consultancy Facts Global Energy, told CNBC.
Earlier this month two oil tankers were attacked in the Gulf of Oman, just outside the Strait of Hormuz, which connects the Persian Gulf with the Gulf of Oman and the open seas. The daily flows of oil through the Strait of Hormuz account for around 30 percent of all seaborne-traded crude oil and other liquids. While Iran vehemently denies involvement in the attacks on the two oil tankers, the U.S. is blaming the Islamic Republic of being behind the attacks.
Days later, Iran shot down a U.S. drone over the Strait of Hormuz, claiming it had violated Iran’s air space. The U.S. says that the drone was in international air space.
The U.S. had apparently prepared a response to the downed drone with strikes on Iranian targets, before U.S. President Donald Trump stopped a planned strike 10 minutes before it begins, because, he said, it was “not proportionate to shooting down an unmanned drone.”
Had President Trump gone ahead with those strikes, oil prices would have jumped by $5 to $10 a barrel because of the geopolitical risk premium, Fesharaki told CNBC.
The expert sees a 50-percent or more chance that the U.S. and Iran will become involved in some kind of conflict, although it may not be a “full war.”
“We have to remember Iran is a regional superpower. U.S. says ‘I’ll put you in a box, please die.’ They (Iran) are not going to stay in a box and just die,” Fesharaki told CNBC.
“They will strike back one way or the other; I think chances of tensions becoming bigger is very, very high in the near future,” the expert noted.
The U.S. imposed new sanctions on Iran on Monday, with “hard-hitting” sanctions on Iran’s Supreme Leader.
Iran slammed those sanctions as “outrageous and idiotic,” with Iranian media reporting that Iran’s President Hassan Rouhani said that the sanctions against the Ayatollah were “an unwise move” and that “The new US measures are the result of their frustration and confusion over Iran. The White House has mental disability.”
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com: