G-7 finance ministers are holding an emergency meeting on Monday morning to discuss options tocap skyrocketing energy prices, with Brent and WTI trading in triple-digit territory as the Middle East conflict threatens to unleash a global energy shock. As the U.S.-Iran conflict intensifies heading into the new week, the Islamic Revolutionary Guard Corps has warned of $200-a-barrel oil.
IRGC spokesman Ebrahim Zolfighari said on Monday that the U.S. has begun a new chapter in the conflict by targeting Iran's energy infrastructure.
"If they can afford the price of oil at $200 per barrel, let them keep playing this game," Zolfighari said in a video message posted by Al Jazeera on X.
“If they can afford the price of oil at $200 per barrel, let them keep playing this game.”The spokesman for a wing of the IRGC, Ebrahim Zolfighari, says the US has opened a new chapter in the war by bombing Iran’s energy infrastructure.pic.twitter.com/UNy21beiAj
Over the weekend, Israeli strikes onmajor oil facilities around Tehran, combined withproduction shut-ins by major Gulfproducers and IRGC retaliatory attacks on energy facilities across the Middle East, sparked panic in energy markets worldwide, with Brent crude brieflytopping $119 per barrel in Asian trading.
On Friday, Goldman analyst Daan Struyven wrote four reasons why oil prices are moving higher:
Shipping has stopped. We estimate that shipments passing through the Strait of Hormuz are down 90% from normal, curtailing 18 mbpd from the global market (~18% of global oil).
Pipeline pressures. We estimate only about 25% of the theoretical redirection of oil in the Middle East through pipelines is currently being achieved, partly due to physical disruptions. We estimate only ~0.9 mbpd are incrementally coming to market through Middle East pipeline initiatives.
No quick shipping solutions. Our conversations highlight that most shippers are in a wait-and-see mode while physical risks in the SoH are high.
Demand destruction may be necessary. With no supply relief in sight, oil prices may need to go to demand-destruction levels even more quickly than history and simple models focusing on Persian Gulf exports alone suggest.
Source: ZeroHedge News
