Rising Middle East tensions threaten global oil supply stability

Tensions in the Middle East are heightening. At the beginning of the week, Israel launched an attack on Lebanon, which responded with a retaliatory strike, firing hundreds of rockets. The United States became involved in the dispute, pledging assistance to Tel Aviv.

The conflict in the Middle East severely threatens the stability of oil prices. By Tuesday morning, the commodity had been cheapening, reaching a cost of 66 dollars (50 GBP), one of the lowest for the year. However, after Lebanon's counter-attack, prices surged sharply, exceeding 72 dollars (55 GBP) per barrel for crude oil by Wednesday. Gold prices also rose.

The Strait of Hormuz, located between the Persian Gulf and the Gulf of Oman, may once again become a focal point. This strategic strait is the world's most important oil transit point, with about 20 per cent of global oil supplies, or 15 million barrels per day, passing through it.

A potential blockade of the Strait of Hormuz would have catastrophic consequences for the global economy. Significant delivery delays and increased transport costs would inevitably lead to a sharp rise in oil prices on global markets. Fuel market experts predict that in the event of a blockade by Iran, the price of oil could reach as much as 150 dollars (113 GBP) per barrel, while a de-escalation could see prices fall below 80 dollars (60 GBP) per barrel.

Cargoes from key oil producers in the region, such as Saudi Arabia, Iraq, Iran, Kuwait, Qatar, Bahrain, and the United Arab Emirates, pass through the Strait of Hormuz. The main recipients of these supplies are China, India, Japan, the United States, and Western European countries. Although Saudi Arabia and the UAE have pipeline infrastructure that could partially compensate for a potential blockade, it cannot fully replace maritime transport.

Iran controls part of the territorial waters through which the navigation route passes, making it crucial for the functioning of the strait. In the event of an escalation and a potential attack by Israel on Iran, oil prices could soar to an astronomical level of 250 dollars (190 GBP) per barrel. It is worth noting that Iran is one of the most essential oil producers and a significant sponsor of organisations such as Hezbollah and Hamas, which aim to destroy Israel.

History shows that Iran has repeatedly threatened to block the Strait of Hormuz in response to various international actions, such as sanctions or withdrawal from nuclear agreements. However, experts believe an actual blockade is unlikely, as it could be met with a firm response from other oil producers in the region and international forces.

The importance of the Bab al-Mandab Strait, located between Yemen and Ethiopia, is also worth noting. This strait, the third most important sea route for transporting energy resources, connects the Indian Ocean with the Mediterranean Sea through the Red Sea and the Suez Canal. A potential escalation between Israel and Iran could also threaten the security of this trade route.

Global markets are closely watching the current situation in the Middle East. A potential blockade of key maritime routes could have far-reaching consequences for oil prices and the entire global economy. This would increase geopolitical tensions and could pressure European politicians regarding the sanctions imposed on Russia.

In response to repeated threats from Iran, many Western countries, including the United States, the United Kingdom, France, and India, maintain their military presence in the region. This aims to ensure freedom of navigation and deter Iran from escalating the conflict. The situation remains tense, with the world anxiously watching developments in the Middle East, aware of the potential consequences for the global economy and energy security.