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The latest attempt by Donald Trump to ease uncertainty over the US and Israel’s war on Iran has only heightened investor concerns.
The US president’s primetime address, saying American forces could leave Iran in two to three weeks, while threatening to strike Iranian electric plants “extremely hard”, has caused the fallen oil price to jump again.
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A barrel of benchmark Brent crude oil is now up more than 7% at $107.50 since his comments, having fallen below $100 yesterday. Oil prices impact the cost of petrol and diesel, home heating oil and prices throughout the economy.
It was a similar story with the UK wholesale gas price, which rose more than 6% following Mr Trump’s statements. British electricity prices are still tethered to wholesale gas costs.
Asian stock markets were also in the red, with Korea’s Kospi and Japan’s Nikkei indices posting big falls of more than 4.5% and 2.3%, respectively.
The crux of the worry is of a 1970s-era energy crisis due to the month-long disruption to shipping in the key oil and gas shipping route, the Strait of Hormuz.
More than a fifth of the world’s oil and liquified natural gas (LNG) is typically transported through the channel but for the last month, it’s been too dangerous and expensive for most tankers to pass.
Iran has attacked many ships making the journey and insurance companies have hiked premiums.
That’s meant shipments not getting through from major petrostates of the Gulf, oil and gas storage filling up and energy producers powering down.
Oil and…
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