Saudi Arabia has warned that the Iran War could have ‘catastrophic consequences’ for world oil markets as the Strait of Hormuz slows to a halt.
Today, Tehran has continued to put pressure on the region’s oil industry after striking neighbouring Gulf State refineries and storehouses.
Iran has effectively stopped cargo traffic in the Strait of Hormuz, through which about a fifth of all oil is shipped from the Persian Gulf toward the Indian Ocean.
It has also targeted oil fields and refineries in Gulf Arab nations as part of a strategy aimed at generating enough global economic pain to pressure the US and Israel to end their strikes.
Amin Nasser, the CEO of Saudi Arabia’s Aramco, warned: ‘While we have faced disruptions in the past, this one by far is the biggest crisis the region’s oil and gas industry has faced.’
Aramco is the world’s largest single exporter of oil, and is currently working to meet demand by tapping into storage facilities outside of the Middle East.
Nasser added: ‘There would be catastrophic consequences for the world’s oil markets, and the longer the disruption goes on … the more drastic the consequences for the global economy.’
Retaliation strikes from Iran have crippled neighbouring countries and started to hit container ships.
Earlier today, a ship off the coast of Oman in the Strait of Hormuz was set ablaze, forcing the crew to abandon the vessel.
Iran did not immediately claim the attack, though it has been targeting ships in and around the strait.
The UKMTO earlier reported on another attack targeting a container ship off Ras al-Khaimah in the United Arab Emirates. In that case, it said the ‘extent of the damage is currently unknown but under investigation by the crew’.
The United Arab Emirates said its air defences were working to intercept incoming Iranian fire.
The wealthy nation, home to the business and travel hub of Dubai, said Iranian attacks have killed six people and wounded 122 others there.
Saudi Arabia isn’t the only nation affected by the oil threats – Qatar’s energy minister, Saad al-Kaabi, warned it would take ‘weeks to months’ to return to its normal delivery pattern of petrol after Iranian strikes crippled liquefied gas plants.
This week, Goldman Sachs predicted the price of oil could skyrocket further in the meantime, up to as much as $150 per barrel by the end of the month.
The UK imports oil and liquefied natural gas (LNG) from a variety of places, not just the Middle East.
However, if supplies passing through the Strait of Hormuz are disrupted, then demand for alternatives goes up, and there could be a significant rise in gas and electricity prices, which is what happened after Russia’s invasion of Ukraine in 2022.
Tankers collecting from various ports on the Persian Gulf must go through Hormuz, a 60-mile-wide part of the Persian Gulf which has been at the heart of regional tensions for decades.
Although most chokepoints can be bypassed by using other routes, which often add significantly to transit time, some have no alternatives.
Maritime ship experts say shipowners are increasingly wary of using the waterway, with some ships having tightened security and others cancelling routes there.
In the UK, an MP has warned that heating oil suppliers are ‘blatantly profiteering’ from the Middle East conflict by doubling their prices for households.
Home heating oil is used by about 1.5 million households in the UK, but sudden volatility in the global oil trade due to Middle East disruption has caused prices to immediately soar.
It is estimated 45% of homes in Aberdeenshire, including Gordon and Buchan, are off-grid and rely on heating oil or LPG.
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