The war in Iran has sent oil prices up by almost 20% - to the level of 2022. One of the most important factors in the oil market is the fear that the blockade of the Strait of Hormuz will last for a long time.
Oil prices continue to rise. The jump in energy prices is particularly shocking for investors and is increasingly fueling fears about inflation and growth: the war in the Middle East is pushing oil prices to ever higher levels. The price of a barrel of Brent and WTI crude oil jumped to around $ 115 over the weekend. This is the highest level since July 2022. In early January, a barrel of crude oil cost just over $60.
JPMorgan Chief Economist Bruce Kassman expects the price of oil to rise to $120 per barrel in the short term, writes ARD. If the conflict continues, the price could rise permanently above $120 and trigger a global recession. According to Kassman, such a scenario could reduce global economic growth by 0.6 percentage points in the first half of the year and increase consumer prices by one percentage point.
The end of the war does not seem close
”Less than a week after the start of the war in Iran, its end is not in sight”, write economists Christoph Balz and Marco Wagner of "Commerzbank”. In their "baseline scenario” For the foreseeable future, they assume that the war, and with it the disruptions to shipping in the Strait of Hormuz, will last only a few weeks.
"However, given the goal of "regime change", which has been repeatedly stated by the US and Israeli governments, there is a risk that the attacks will last for several months and thus interrupt the transportation of oil and gas for a longer period," the two experts quoted by ARD believe.
In the conditions of a tense situation on the global oil market, US Treasury Secretary Scott Besant said that Washington is considering the possibility of easing sanctions against Russian oil, which is already on board tankers. The US has also exempted Indian refineries for 30 days from a ban on buying Russian oil, which is already loaded on tankers, so that "oil can continue to flow to the world market".
Will inflation return?
The consequences would be serious not only for the global economy, emphasize experts from "Commerzbank". A prolonged and sustained rise in oil prices would likely lead to a new rise in inflation. In the eurozone, inflation of three percent would be possible, which would slow economic growth, emphasize Balz and Wagner.
Oil prices also caused a collapse in Asian stock markets today: in Tokyo, the Nikkei 225 index fell by more than 6%. The broader Topix index fell more than 5%.
”Asia is the most affected by the sharp rise in oil prices and has almost no protection mechanisms,” said Vishnu Varathan of ”Mizuho Bank”. In addition to Japan's Nikkei, the South Korean stock exchange also fell 8.1%. The Shanghai Stock Exchange is currently down more than 1%.