Baku, Azerbaijan, Jan.4
By Leman Zeynalova – Trend:
Oil price could skyrocket if the situation further escalates in Iraq, Sam Barden, Director of SBI Markets, an international commodity trading and advisory company, told Trend.
He was commenting on the death of Major General Qassem Soleimani, the head of Iran's Islamic Revolutionary Guard Corps (IRGC) - Quds Force as a result of air strikes at Baghdad Airport.
“The oil price could skyrocket if this situation escalates and the Strait of Hormuz is closed,” said Barden, adding that however, if US and Iran come to a deal, the oil price will be stable and global economic situation could survive.
“If not, then we could see huge gyrations in currency and commodity markets led by oil,” noted the expert.
Cyril Widdershoven, a Middle East geopolitical specialist and energy analyst, a partner at Dutch risk consultancy VEROCY and SVP MEA-Risk, believes that the reaction on the oil markets will be larger.
“The latter will partly depend on the possible reaction of the IRGC and Iran overall. This all will put a main threat to oil and gas exports and production which will increase the price overall. The long term results are clear as the confirmation,” he told Trend.
Edward C. Chow, Senior Associate, Energy and National Security Program, Center for Strategic and International Studies, noted that any time there is increased tension in the Persian Gulf, oil price will jump.
“Even before this week's escalation, oil price had risen after the most recent OPEC+ agreement and the likely easing of trade conflict between US and China. It remains to be seen whether there will be further escalation of conflicts in the Persian Gulf and whether they will impact physical oil flows,” said the expert.
Meanwhile, he pointed out that the oil producers will take advantage of the higher prices by producing as much as they can and economic uncertainty will affect negatively global oil demand.
“Oil price will rebalance, perhaps at a slightly higher level, unless conflicts spread and intensify, in which case all bets are off,” added Chow.
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