Germany's WirtschaftsWoche Magazine asks Dr. Nansen Saleri three questions regarding global tensions in oil-producing regions, and how this reflects on the price of oil.
Iran is responsible for less than three per cent of world-wide oil deliveries. Hence, by itself it does not represent a large threat, particularly since increasing supplies from Iraq and Libya can offset production losses from Iran.
The climb of oil prices reflects global tensions surrounding oil-producing regions. Has little to do with supplies. If the USA, Iran and Israel signed a friendship treaty tomorrow, the price will sink immediately to approximately $80 dollars [USD] per barrel. Furthermore, the debt crisis in Europe underscores the role of oil and energy as a safe haven for investors.
In the worst case the Strait of Hormuz, which controls 20 percent of worldwide oil deliveries, would no longer be passable. The consequence would be catastrophic. How high the price would rise, I do not want to say, since this only feeds speculative fervor. Not the end of the world however. In the medium term there are workarounds that allow rerouting of oil away from the Hormuz Strait. Therefore, it would only be a matter of time. The crisis will subside.
See the original article in German on WirtschaftsWoche Magazine online >>