Oil (CL=F, BZ=F) prices are rising for the fifth consecutive trading day on the fear that escalating conflict in the Middle East could impact oil supplies. Lipow Oil Associates President Andy Lipow joins Catalysts to discuss the movement and the commodity’s outlook as tensions rise in the Middle East.
“The market is certainly concerned about this escalating tension between Israel and Hezbollah across the Israel-Lebanon border, and whether that could ultimately result in Israel striking its facilities in Iran. But I don’t think that we’re going to see a Strait of Hormuz being shut down or things like that. But the market is pricing in additional geopolitical risk that such an event could occur,” Lipow explains.
He notes that the Strait of Hormuz is particularly important as it is where 20% of the world’s oil supply transits. If it were to be shut down, oil prices could rise by $30 to $40 per barrel.
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This post was written by Melanie Riehl