Oil prices could exceed $100 per barrel within days if disruption through the crucial Strait of Hormuz does not ease, Goldman Sachs has warned as new data shows dwindling UK gas supplies.
The investment bank currently estimates that average daily flows through the Strait of Hormuz waterway, a strategic choke point between Iran and Oman, are down 90 per cent. As much as a quarter of the global seaborne oil shipments usually pass through the key route but traffic has ground to a halt due to the US and Israel’s war on Iran.
In a note released on Friday and reported by Reuters, Goldman Sach analysts said: “We now also think it’s likely that oil prices, especially for refined products, would exceed the 2008 and 2022 peaks, if Strait of Hormuz flows were to remain depressed throughout March.”
Meanwhile new data published by National Gas indicates that the UK could have as little as two days of gas stored up. The UK is now paying the highest wholesale gas prices in Europe, according to The Telegraph.
A National Gas spokesperson told the paper that the UK benefits from a “wide range of gas supply sources” that would “provide the flexibility needed to balance supply and demand”.
Soaring oil and gas prices have pushed up costs for companies, threatening their margins, and raised the spectre for policymakers and investors of a fresh bout of inflation.
“If these effects last longer, everyone will start to feel them,” Young Liu, chairman of Foxconn, the world’s largest electronics maker and a key partner to Nvidia, said on Friday.
A prolonged energy shock could call for the “recession playbook”, Morgan Stanley warned, while Goldman Sachs analysts said a temporary surge in oil prices to $100 per barrel could slow global growth by 0.4 of a percentage point.
Experts have also warned that the effective closure of the Strait of Hormuz could cause a global food crisis, with the production of fertiliser dependent on products that pass through the Strait.
Israel struck oil storage facilities in Tehran on Sunday as the war in the Middle East continued to escalate. Israeli prime minister Benjamin Netanyahu promised “many surprises” for the next phase of the conflict. The Israeli attack on oil storage sites in Tehran sent up pillars of fire, in what appeared to be the first time a civil industrial facility had been targeted in the war.
Bahraini authorities also said that Iran hit a desalination plant. Earlier on Sunday, Iran’s foreign minister Abbas Araghchi said that a US airstrike damaged an Iranian desalination plant on Qeshm Island, warning that in doing so “the US set this precedent, not Iran”.
The plant is crucial for water supplies for the civilian population.
