The largest U.S. military buildup since the 2003 Iraq invasion is aimed at Iran, and the outcome of a tense standoff could mean the average price at the pump falls to $2.50 per gallon or spikes astronomically to $5 in the case of war, geopolitical and energy analysts told Fortune.
The reason for the extreme range of potential impacts is the Strait of Hormuz offshore of Iran. The narrow, 104-mile strait is the main choke point separating the Persian Gulf—and the daily flow of nearly 20 million barrels of oil—from the Indian Ocean and global energy markets. Most of the crude oil from Saudi Arabia, Iraq, Iran, Kuwait, and the United Arab Emirates must pass through the strait.
“The stakes are so high,” said oil forecaster Dan Pickering, founder of the Pickering Energy Partners consulting and research firm. “The biggest risk to a disruption would be from Iran if they’re backed into a corner and have nothing to lose.”
The Middle East “playbook” for conflicts over the last 20 years is to avoid targeting oil infrastructure, Pickering said, including during the so-called Twelve-Day War between Israel and Iran last June that culminated with the U.S. dropping bunker-buster bombs on Iranian nuclear sites.
