Middle East Tensions Could Trigger the Next Oil Shock
Middle East Tensions Could Trigger the Next Oil Shock By Nick Giambruno for Casey Research
The world’s next oil shock is playing out exactly as I predicted…
On Saturday morning, tensions in the Middle East escalated after drones attacked two major oil facilities in Saudi Arabia.
The strikes knocked out more than half of Saudi Arabia’s crude oil output… and 5% of the world’s oil supply. The Houthi movement in Yemen, which is at war with Saudi Arabia, claimed responsibility. The U.S. government, however, has blamed Iran.
In any case, this attack is unprecedented and makes escalating actions almost inevitable. I think it’s only the beginning.
If you thought this attack was disruptive, understand that it’s only a tiny example of what could really happen in the case of a full-fledged war with Iran, which grows more likely by the hour.
If you’ve been reading the Dispatch, this shouldn’t come as a surprise at all. I’ve been saying that the chances of war with Iran are higher than ever…
And when it happens, it will have tremendous consequences for the price of oil.
We’re seeing this play out just as I predicted. The attacks sent the global oil markets into chaos… and crude oil prices are up 14% today as I write.
And I saw it coming a mile away. Today, I’ll show you everything you need to know about the rising tensions with Iran – including what Iran could do next…
You see, about a year ago, I warned readers of my newsletter, The Casey Report, that the next big war in the Middle East was coming. And I showed them why it would focus on Iran.
But let me give you a quick refresher of what’s going on…
Tensions in the Persian Gulf region were already near a boiling point as U.S. sanctions choked Iran’s economy. But Iran hasn’t taken this economic strangulation lying down. It has a few cards to play, too.
Let me explain…
Things have been heating up around a key waterway in the Middle East – the Strait of Hormuz. Six oil tankers were attacked near the Strait and the Persian Gulf, and the U.S. government blamed Iran.
Iran then shot down a $120 million U.S. drone. It claims the drone was flying in its airspace.
In response, Trump approved airstrikes against Iranian targets. It would have started a full-scale war… but Trump pulled back at the last minute.
And those are just a few of the skirmishes that are now making headlines. In short, tensions between the U.S. and Iran are flaring.
But Iran holds a powerful card… because it controls the Strait.
Oil’s Most Important Chokepoint
The Strait is a narrow strip of water that links the Persian Gulf to the rest of the world. It’s the most important oil chokepoint in the world.
Five of the world’s top 10 oil-producing countries – Saudi Arabia, Iran, Iraq, the United Arab Emirates, and Kuwait – border the Persian Gulf. The Strait of Hormuz is their only sea route to the open ocean… and world markets.
Every day, nearly 19 million barrels of oil pass through the Strait of Hormuz. That translates into roughly 33% of the world’s oil traded by sea. It’s over $1.2 billion in value every single day.
That’s part of the reason why big Middle East wars are often catastrophic for global oil supplies. After all, almost 40% of global oil exports comes from the Middle East. Take a look: