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The clock is ticking on the U.S.-Israeli war in Iran. The emerging view from oil industry executives and analysts is that the economic and market fallout from the war could escalate sharply if the Strait of Hormuz isn’t reopened within roughly the next one to three weeks. Even then, enough damage may have been done already to leave energy and many other prices higher for longer.
These risks haven’t been clearly reflected in some widely followed markets, including stocks broadly and the benchmark Brent crude price
. Stopgap measures to soften the blow of the oil cutoff have kept crude prices relatively low in the U.S. and European markets. But when those measures lose their effectiveness in early-to-mid April, analysts warn there will be little the U.S. or other governments can do to keep energy prices from rising dramatically.
Iran has attacked civilian ships and energy infrastructure in its neighborhood, causing traffic in the narrow Strait of Hormuz to fall to a standstill. Roughly 20% of global oil supply normally moves through the approximately 100-mile waterway, which borders Iran. Some oil has been rerouted through pipelines, but they can only carry so much. The U.S. and others are releasing 400 million barrels of oil from strategic reserves — the biggest release on record — and the U.S. has temporarily lifted sanctions on some Russian and Iranian oil to give the market breathing room.
