Anxiety over oil prices rises as matters regarding Iran uncertain

As recent geopolitical tensions have brought some dire market and economic projections centering around oil prices, Bloomberg has provided a closer look at how conditions in the energy markets influence US foreign policies. Caliber.Az reprints this article.

"War in the Middle East could send oil surging to $140 a barrel and bring the world to the brink of a recession, according to Ana Boata, head of economic research at Allianz Trade. Bloomberg Economics goes further, saying that crude prices could surge to $150, stripping $1 trillion from global economic output and sending the world into recession.

This may be helping shape the more delicate approach the US is taking with respect to Iran, among others, as Israel fights Tehran-backed Hamas. Not only would a wider war threaten many more lives, but it would also interrupt a significant crude supplier that could send prices surging.

'This administration has done a very good job of doing the calculus of not cutting off its nose to spite its face, especially when you look at energy prices, which are the most tangible reality of impact of some of these events', said Oliver Wyman’s Dan Tannebaum, offering a delicate response to a question about how much oil prices are shaping US policy.

While Iran denies helping Hamas plan the October "7 assault on Israel, its fingerprints are all over proxy groups like Hamas and Hezbollah, and the specter of a wider war has many policymakers (and market participants) on edge. So far, the US has avoided aggressively pursuing the nation, with an eye on a broader regional conflict spilling out of Israel and sending oil prices surging. Brent crude was over $93 today.

'Do you want to deal with the threat from Iran or do you want to pretend it does not exist?' said John Bolton, Donald Trump’s former national security adviser and a longtime Iran hawk. 'The administration has gone out of the way to pretend it doesn’t exist'.

Oil has been at the center of much of the geopolitical tension in recent years, and the US's response has been a bit of whack-a-mole to hit the worst-offending nations with curbs and sanctions while not causing pain at the pump. This led to a lack of focus on curtailing Iranian crude exports, Tannebaum said.

'It’s been an interesting two years if you look at what’s happening, obviously with the crisis in Ukraine, the sanctions on Russia, trying to pull some Russian oil off the market to a limited extent', he said. 'The US certainly wasn’t as focused on Iranian oil sanctions to keep some of that oil on the market'.

Tannebaum said the US rollback on Venezuelan sanctions this week was hardly a coincidence, 'and in the next few months you’ll see Venezuelan oil, which is largely the dirtiest oil in the world, come back on the market' ".