Iran Parliament Votes To Close Strait of Hormuz, Sending Oil Futures Up in Global Markets

Oil prices are expected to rise further following Iran’s threat to close the Strait of Hormuz in response to America’s surprise bombing early Sunday of three Iranian nuclear facilities.Iran’s Parliament voted unanimously on Sunday to cut off traffic in the strait, through which about one-fifth of the world’s oil supply flows. The Supreme National Security Council has final say, but the head of the Iran Revolutionary Guard Corps, Esmail Kosari, who is a member of the council, suggested that the closure would occur within hours after approval. The Strait, located between southern Iran and the northern tip of Oman, connects the Persian Gulf to the Gulf of Oman, which leads out to the Arabian Sea and the Indian Ocean. Ninety percent of Iran’s oil is exported through the strait, as is oil from Iraq, Kuwait, the United Arab Emirates. Three of Saudi Arabia’s key oil ports are located in the Persian Gulf as well, suggesting that closing the strait could draw other nations into the conflict and contribute to regional instability. While oil prices had already been rising following Israel’s first strikes on Iran nine days ago, setting up mines to block the strait would have global implications. Oil prices, currently fluctuating around $75-$79 per barrel, could spike to $90, $100, or higher per barrel, according to some industry analysts. Gas Buddy’s head of petroleum analysis, Patrick De Haan, said he doesn’t expect gas prices to skyrocket in America, however, though prices at the pump could increase by 10 -30 cents a gallon in the short-term. “Addressing some egregiously incorrect tweets I’ve seen. No, oil prices are not ‘likely to spike 30-50%’. My take: WTI crude prices may rise close to $80 No, U.S. gas prices are not at risk of ‘hitting $5-$7/gal’ My take: they could climb to $3.35-$3.50/gal in the days ahead,” he wrote.With America exporting more oil than it uses and getting its imports from sources other than Iran, Tehran’s key oil export nations — South Korea, India, Japan, and China — would be more likely to feel the pinch of a cordoned off strait.“It would hurt other countries’ economies far worse than ours,” said Secretary of State Rubio. He added that a decision to close the strait may be a move more for Iranian domestic consumption than to punish America, but “it would be a massive escalation that would merit a response not just by us but from others.”“If they want to negotiate, we’re ready to negotiate. If they want to get cute and do things that are dangerous, we have responses available that are devastating,” he told Fox News.Vice President Vance said closing the strait would be far more devastating for Iran than for other countries.“That would be suicidal for the Iranians themselves,” Mr. Vance said on “Meet the Press” Sunday. “I mean their entire economy runs through the Strait of Hormuz. If they wanted to destroy their own economy and cause disruption in the world, I think that would be their decision. But why would they do that? I don’t think it makes any sense.”The parliamentary vote follows a surprise American attack on Iran’s three main nuclear facilities — Natanz, Isfahan, and Fordow — early Sunday morning. Seven stealth bombers dropped 14 bunker buster bombs, equivalent to about 420,000 pounds of ordnance in an effort to prevent Iran from advancing its nuclear weapons program. Iran declared America’s bombing an act of war. Iran’s Foreign Minister, Abbas Araghci, called for a meeting of the United Nations Security Council, of which America is a permanent, veto-wielding member, to issue “an unequivocal condemnation” of America and Israel. The Security Council agreed to meet late Sunday. “The aggressive action of the United States of America must be condemned in the strongest possible terms,” Mr. Araghci wrote to the United Nations’ secretary general. “The US government must be held accountable for this criminal attack, carried out in support of a regime led by an internationally wanted war criminal that is pushing the world into chaos and instability.”Mr. Rubio said any decision to close the strait will expand beyond the region to likely involve Iranian ally China, which is also a veto-holding member of the Security Council. China condemned the overnight attacks, and called on the parties in the conflict, but Israel, in particular, “to reach a ceasefire as soon as possible” and “start dialogue and negotiation.”A former Israeli intelligence officer, Avi Melamed said China being drawn further into the discussion could lead Iran to the table rather than to a greater escalation of the conflict, which could threaten the regime’s survival. “At this point Iran has yet not closed the Hormuz strait. I (find) it hard to believe that China is supportive of such a move,” he told The New York Sun.

Iran Parliament Votes To Close Strait of Hormuz, Sending Oil Futures Up in Global Markets

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