Alexey Gromov, Principal Director on Energy studies at the Institute for Energy and Finance, commented to Forbes on the current and possible long-term impact of the Iran-Israel conflict on the global oil market.
The escalation in the Middle East happened, but it was already embedded in traders' expectations, Alexey Gromov said. According to him, the initial jump in the cost of a barrel on June 13 turned out to be very significant, given the limited military conflict, rising supply and the OPEC+'s game of lowering prices. Traders initially feared an uncontrolled escalation of the conflict, including threats to shipping in the Strait of Hormuz, but this did not happen and there were no disruptions to oil supplies from the Persian Gulf. As a result, the markets calmed down and price growth stopped, the expert stated.
"So far, the war has not gone beyond the air attacks that we have been witnessing for two years," the expert argues. — After the unprecedented terrorist attack in October 2023, Israel and Iran have already exchanged missile strikes. Now we see about the same thing. There is an air war going on, in which the prospects for further escalation are not yet clearly visible."
"Forecasts about the rise in oil prices to some sky-high heights and the closure of the Strait of Hormuz will not come true," Gromov believes. — The key reason is that the parties to the conflict themselves are afraid of such a development. The uncontrolled situation that may arise in the region as a result of such actions can bring down Iran's economy, which is fraught with the loss of its state subjectivity, at least the subjectivity that Iran built after the overthrow of the Shah's regime in the late 1970s. In my opinion, the authorities in Iran understand this and strive to prevent an unpredictable escalation that Iran may simply not be able to withstand."
Subscribe for updates
and be the first to know about new publications