The biggest question facing global energy markets is whether Iran will respond to the U.S. bombing of its nuclear facilities by disrupting the flow of oil and natural gas in the Persian Gulf region.
The economic toll would be steep, including for Iran. That is because a large portion of the world’s oil and liquefied natural gas, or L.N.G., passes through the Strait of Hormuz, a waterway that hugs a portion of Iran’s southern border.
Any attempt to close the strait, which connects the Persian Gulf to the Gulf of Oman, would most likely send oil prices soaring. It would also inflict severe economic damage in Iran because nearly all of the country’s oil exports move through the channel.
The market’s early reaction to the U.S. bombing of three Iranian nuclear sites over the weekend will become clear on Sunday evening, when crude oil futures begin trading at 6 p.m. Eastern time.
U.S. oil prices have climbed around 15 percent in the past two weeks, settling on Friday at $74.93. That is a moderate price by recent standards.
But if Iran were to try to stop oil from flowing through the region, even temporarily, prices would most likely rise far higher, analysts have said. Another risk is if Iran were to attack U.S. military bases in the Middle East.
“If Iran follows through on threats to retaliate against U.S. forces in the region, traders might finally — after more than three years of geopolitical ‘wolf’ cries — price in escalatory pathways that previously seemed far-fetched,” ClearView Energy Partners, a Washington research firm, wrote after the United States bombed Iran.
The war is already increasing energy costs for consumers in the United States. The price of a gallon of regular gasoline climbed nearly 3 percent last week, to $3.22, according to the AAA motor club. This time last year, the price was $3.45 a gallon. Prices at the pump generally lag oil prices.
Iran’s foreign minister, Abbas Araghchi, said on Sunday that Iran would respond in “self-defense” but declined to explain what that might entail.
It would be difficult for Iran to close the Strait of Hormuz for a long time, but the country could make passing through it more treacherous, analysts have said. “Multiple security experts contend that Iran has the ability to strike individual tankers and key ports with missiles and mines,” RBC Capital Markets analysts wrote on Sunday.
Last week, two oil tankers collided near the strait as many vessels reported experiencing interference with their GPS systems. The United Arab Emirates attributed the crash to navigational errors.
Around a fifth of the world’s oil and related products flows through the Strait of Hormuz each day, according to the U.S. Energy Information Administration. A similar share of L.N.G., or natural gas that has been cooled for shipment, also makes the journey.
More than 80 percent of those fuels go to Asia, meaning those countries would be severely affected by any closing, the energy administration said.
The United States and other countries would feel the effects in the form of higher energy costs.
Vice President JD Vance said on Sunday morning that disrupting shipping in the Strait of Hormuz would be “suicidal” for Iran.
“What would make sense is for them to come to the negotiating table to actually give up their nuclear weapons program over the long term,” he said on the NBC program “Meet the Press.”
Rebecca F. Elliott covers energy for The Times with a focus on how the industry is changing in the push to curb climate-warming emissions.
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