An Energy Catastrophe
With domestic energy news focused on the two mega-mergers from oil titans Chevron and Exxon Mobil, the ongoing war abroad has caused dire forecasts over the price of crude oil. International tension between Israel and Hamas has the potential to drastically shift the prices of oil in the coming months, as reported by Bank of America. With the current oil market being driven into tighter situations caused by Saudi production cuts through OPEC, prices could be pushed even higher if Iran became involved in the war. Earlier this week, the oil benchmark Brent crude-maintained levels around $88 per barrel after nearing $100 in the weeks prior. Bank of America estimates that upon the possibility of Iran entering the conflict, crude oil could be increased to a range anywhere from $120 to $130 a barrel.
As of now, Iran remains a key supplier of energy to Hamas, and any supply disruptions to Iran’s oil could affect its nearly 2 million barrels per day output. If just 1 million barrels per day were lost through supply interference, a price of $130 per barrel is likely. The Strait of Hormuz could also come into play, being a vital trade route for OPEC and one of the major oil passages on the globe. In a worst-case scenario, if this vital passage were blocked by any means, over 20 million barrels per day would be gone, having the potential to drive prices to as high as $250. The war’s potential effects on higher energy prices and even trade route disruption have enough power to change the tides for markets and entire global economies.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
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