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An Iranian lawmaker has suggested that the United States is creating insecurity in the Middle East in the hopes of bringing oil prices up to $200 per barrel, according to Mehr News Agency.
The accusation speaks nothing of the trade war between the US and China, which has pushed oil prices to year lows in recent weeks on fears that the trade war would dent demand growth. Analysts have lowered demand growth forecasts several times in recent months as the trade war appears to have no speedy end in sight.
““I believe that America is after creating insecurity in the region and increasing oil prices to $200. The Americans want to create problems for the economy of oil-consuming countries so that they can justify their behavior in the region and in the world,” Abolfazl Hassanbeigi, member of the Iranian Parliament’s National Security and Foreign Policy Commission, told Mehr on Monday.
Tensions have increased in the Gulf after Iran seized a British oil tanker traveling through the Strait of Hormuz, reportedly in response to Gibraltar seizing an Iranian super tanker thought to be carrying oil to Syria in violation of European Union sanctions against Syria. The seizures are just the latest in a string of security issues plaguing the world’s most critical chokepoint for oil, after explosions damaged a few oil tankers in the month prior.
Despite these heightened tensions in the Middle East, oil prices have trended downward over the last month, dragged lower by bleak oil demand growth prospects.
WTI was trading up slightly on Monday, at $54.90 (+0.73%), while Brent crude was trading at $58.73 (0.34%).
The United States has called upon the international community to join forces to secure the vital shipping lanes in the Persian Gulf.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.
If the purpose is to stimulate shale oil production, this is already in decline. High oil prices can’t resurrect the dead. So there is no benefit to the US from such oil prices. A $200-oil price will damage the global economy including US economy.
For these reasons, such a price could never materialize except if the Strait of Hormuz is completely blocked simultaneously with a stoppage of Saudi oil exports and production resulting from damage to its oil production assets and exporting terminals. Such a possibility is too far-fetched to become a reality.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London