Prices at the pump might be about to skyrocket.
Transcript:
Following U.S. strikes on three Iranian nuclear sites on June 21, the world is waiting for Iran to respond. President Trump said “Monumental Damage” was done to all of Iran’s Nuclear sites and the Iranian army warned that those strikes will be met with a harsh response.
One of Tehran’s most disruptive options to strike back could be to blockade the Strait of Hormuz, which is critically important. 20% of the world’s oil flows through the strait — that’s about 20 million barrels of oil every day, according to the US Energy Information Administration. The EIA has called the channel a “critical oil chokepoint.”
Blocking the strait would likely have a huge impact on oil prices, with analysts predicting they could spike above $100 a barrel. So far, action is muted in early trading Monday morning with US West Texas crude trading below $75 a barrel.
There have been no major disruptions to the global oil supply so far, but the number of vessels navigating the Strait of Hormuz appears to be declining, due to the deterioration of the security situation. That’s according to CNBC, citing the world’s largest shipping association Bimco.
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