It was only a little over a day ago that the American investment bank Goldman Sachs warned that the price of oil could eventually rise above $110 per barrel if Iran blocked the Strait of Hormuz.
But the reality today is that the price of Brent oil from the North Sea is trading at around $67. That is about nine percent lower than a day ago. The price drop is a market reaction to the latest events in the conflict between Iran and Israel.
First of all, it was seen as positive that Iran's attack on American bases in Qatar was very measured and had even been warned in advance. And then followed Donald Trump's announcement that a peace agreement was just around the corner.
Chief analyst Jan Størup Nielsen from Nordea notes that the financial markets reacted positively to the news at a time when it had not even been confirmed by any of the parties to the dispute.
The fear of an escalation of the conflict caused the oil price to take a temporary jump upwards on Monday.
The Strait of Hormuz is a narrow waterway between Iran and Oman, and if Iran decides to close it to shipping, it will block the transport of around 20 percent of the oil produced in the world.
Investment economist Per Hansen, however, believes that the risk of an Iranian blockade of the Strait of Hormuz is very small.
- It doesn't make much sense either, because it would also pacify their own lifeblood and source of income for the oil that they sell, not least to China, he estimates.
/ritzau/
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