CNBC - Oil could top $200 if Saudi-Iran war breaks out

Oil could top $200 if Saudi-Iran war breaks out

  • The threat a Saudi-Iranian war is looking increasingly credible as tensions rise in the Middle East.
  • The impact on the global economy would be severe. Oil could rise to $200 per barrel.
  • The U.S. must drop the inflammatory rhetoric and calm tensions in the Middle East.
Steven Kopits, managing director, Princeton Energy Advisors

Published 3:34 PM ET Fri, 10 Nov 2017 Updated 5 Hours Ago

Events appear to be spinning out of control in the Middle East, and the threat a Saudi-Iranian war is looking increasingly credible. Make no mistake, an out and out conflict between the two nations would be an unmitigated disaster for the region and the world.

Last week, Houthi rebels in Yemen launched a missile targeting a Saudi airport near Riyadh. The missile was intercepted, but a Saudi-led military coalition battling the Yemeni rebels called the attack a "blatant military aggression by the Iranian regime which may amount to an act of war." The Saudis reserved the "right to respond", according to the official Saudi Press Agency.

The major OPEC oil producers, all abutting the Persian Gulf, export almost 20 percent of the world's oil supply through the Strait of Hormuz, which connects the Persian Gulf to global markets. The strait, a mere 34 miles wide at its narrowest, sits pinched between Iran to the north and Oman to the south. Were a war between Saudi Arabia and Iran to erupt, this chokepoint could easily be closed.

Indeed, shipping could stop even before a single ship is damaged. If insurers perceive an imminent risk of attack on a tanker in the region, they would either suspend insurance or charge exorbitant rates for coverage. Under the circumstances, vessel owners could opt to wait out the hostilities rather than risk their tankers.


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Comment by Bananaman on November 13, 2017 at 4:27pm

200 seems a bit optimistic i think, i heard the Saudis have nukes, just a rumour, they probably couldn't afford one

Comment by Bananaman on November 13, 2017 at 4:25pm

Damn, shouldn't have bought a fucking hummer then lol


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