Good News Everyone! Iran Strait Crisis Could Mean Cheaper Oil... Maybe!

Wernstrom! A Looming Crisis?

Good news everyone! It seems Iran is threatening to close the Strait of Hormuz. Oh dear! According to reports their parliament has approved this closure after some... kerfuffle involving U.S. strikes. But don't go selling your doomsday shelters just yet! This could be a whole lot of 'much ado about nothing,' as they say in that old Earth play... by Shakespeare! Or was it Shatner? I can never remember.

Sweet Zombie Jesus! Who Loses the Most?

Apparently experts are saying Iran has the most to lose from this stunt. Imagine that! Risking a fight with your neighbors and alienating your trade partners? That's like mixing dark matter with anti matter! Kablooie! Vandana Hari some expert at an energy intelligence firm says the possibility of closure is 'absolutely minimalistic.' Seems logical. Why bite the hand that feeds you sweet sweet crude oil profits? And speaking of sweet where's my sugar cubes?

Silence! China's Perspective

Now China's in the mix too. They're quite fond of Iranian oil you see. This Clayton Seigle fellow from the Center for Strategic and International Studies says China's 'very dependent' on Gulf oil. Apparently they value stability which is a change. Disruption puts a target on Iran’s oil infrastructure when U.S. and Israel are feeling 'trigger happy.' Makes sense or as I sometimes say “Whom.”

To Shreds You Say?

So what's the actual risk? The Strait is the only sea route from the Persian Gulf to the open ocean and about 20% of the world's oil transits it. That's a lot of oil folks! The U.S. Energy Information Administration calls it the 'world's most important oil transit chokepoint.' This is bad news to everyone or no one depending on your view of things.

Good News! Or Maybe Bad News! Who Knows?

Experts believe Iran's strategy would be to 'rattle Hormuz oil flows just enough' to hurt the U.S. without provoking a major response. So a little chaos a little price hike and everyone goes home… hopefully! Patrick De Haan says gas prices in the U.S. could climb a bit. So stock up now or start pedaling your bicycles. Your choice! And mine's to find out why this bicycle is moving by itself!

I Don't Want to Live on This Planet Anymore!

S & P Global Commodity Insights says closing the strait would affect not only Iran's exports but also those of its neighbors removing billions of barrels of oil from global markets. Goldman Sachs estimates that the market is already pricing in a geopolitical risk premium. So get ready for a bumpy ride folks! And remember a watched pot never boils… but it might explode if you leave it on too long!