How's your gas tank? You might want to top off in the next few days. Due to the ongoing fracas in the Middle East between Israel and Iran, and now, the United States, oil prices may be headed up. If Iran succeeds in closing the Strait of Hormuz, even for a few days, the rise may be considerable.
Oil prices are expected to rise following what President Donald Trump called "a spectacular military success" in which, he said, Iran's nuclear enrichment facilities had been "obliterated." Trump also said the U.S. military could go after other targets in Iran if the country did not agree to peace.
Saul Kavonic, a senior energy analyst at equity research firm MST Marquee in Sydney, told Reuters the more likely scenario would see Iran respond by targeting American interests in the Middle East, including Gulf oil infrastructure in places such as Iraq or harassing ship passages through the Strait of Hormuz.
The Strait of Hormuz lies between Oman and Iran and is the primary export route for oil producers such as Saudi Arabia, the United Arab Emirates, Iraq and Kuwait. It is considered one of the world's most important oil chokepoints, according to the Energy Information Administration (EIA).
The Strait of Hormuz sees about a fifth of the world's oil production pass through that strategic chokepoint. Earlier on Sunday, my RedState colleague Mike Miller informed us of Iran's threat to close the Strait. Whether they can do that remains to be seen, but even the threat could affect oil prices in the short term.
See Also: New: Iranian Parliament Orders Closure of Strait of Hormuz, Threatening Global Oil Supply
Oil is, of course, a globally traded commodity. A regional issue can change the global prices, and often does; that's how fungible commodities work. If one major oil-producing nation's output goes off the market, the price rises everywhere. We can attenuate that to some degree, but not altogether. Increasing our domestic production, as President Trump campaigned on and is working on implementing, can help, but most of the new "drill, baby, drill" efforts aren't online yet and won't be for some time.
The key will lie in keeping the Straits of Hormuz open, so traffic from the oil-rich Gulf states can reach the markets. President Trump, we note, has moved some U.S. Navy assets into the region, and it's important to note that the Navy has managed to reduce (but not eliminate) the threat to the Strait and the Gulf of Aden posed by the Iranian-backed Houthis. But this means another fight, no matter how lopsided it may be.
We have an interesting few weeks ahead. Iran is still under the thumb of the mullahs; the theocrats in Tehran are bloodied and bruised but not defeated, not yet. As I've been saying and writing for years, it will take the Iranian people to do that; to decide that they've had enough. Then, and only then, will the threat Iran poses to the world be done with.
See Also: Vice President Vance on Iran: 'We Actually Want Peace.'
So, topping off wouldn't be the worst idea just now. I just filled up both our trucks, including the 32-gallon tank in my F-350. We're good for a while.
Editor's Note: President Trump is leading America into the "Golden Age" as Democrats try desperately to stop it.
Help us continue reporting on President Trump's success. Join RedState VIP and use promo code FIGHT to get 60% off your membership.