After the Israeli strikes that occurred during the night of Thursday to Friday, the oil price took 10% in one day. An increase that was already prepared before the strikes, explains Philippe Chalmin, economist specializing in raw materials and hydrocarbon expert.
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While an Iranian nuclear agreement was about to succeed between Tehran and Washington, Israel massively struck Iran in the night from Thursday to Friday June 13, immediately causing movements in stock market prices.
These Israeli strikes, which mainly targeted Iranian nuclear, have not only consequences a risk of embracement in the region, they also resulted in an immediate increase in oil prices from 10 to 12%. But this increase, which intervenes in a rather contained context recently contained, will not reach the exorbitant prices that we have known, according to Philippe Chalmin, economist specializing in raw materials, and hydrocarbon expert.
franceinfo : On site, Iranians fear a shortage of petrol. In France, we should expect tensions in supplies ?
Philippe Chalmin: Tensions in supplies, no. An increase in prices is quite likely. Coarsely, the price of a barrel went from 65 to 75 dollars. And in general, it is estimated that a dollar on the barrel translates – taking into account all the exchange factors and other – around 1 cents per liter at the pump. So that means that towards the end of next week, we should pay our petrol for ten more cents.
But if the intense strikes as promised by Israel came to touch Iranian oil installations, the shortage is a possibility? Iran is one of the ten largest oil producers in the world.
Yes, but Iran does not weigh that on the world market. Iran, it is indeed the world’s fourth reserves of oil, 10% about the world’s oil reserves. But on global production which is around 102 or 103 million barrels per day, Iran produces 3.5 million. And as the Iranians consume a lot, their exports, lately, were around 1.4 to 1.7 million barrels day. So it’s not huge.
“Most of their exports leave on China – and it is China which is basically practically the main funder of the Iranian regime at present.”
Philippe Chalmin, an expert economist expert in hydrocarbonsin franceinfo
The crisis also threatens a highly strategic path for oil from the Gulf countries: the Strait of Ormuz. Can Iran possibly block this passage?
This is the main reason why the markets have reacted so much, in the past three days. Because in fact, the increase had started before Israeli attacks. The main reason is that there are Iranian reactions. Iran is unlikely to attack the oil installations in the southern Gulf countries. But on the other hand, indeed, it can without too many problems – or difficulty – block or at least significantly disturb traffic in the Strait of Ormuz. However, through the Strait of Ormuz spend 20 million barrels day of oil roughly. It is 20% of global production, but in reality almost a third of world flows, therefore of exported oil. And then, it is also necessary to take into account the businesses who pass by. All Liquefied natural gas exports from Qatar go through the Strait of Ormuz. But before engaging in what would be an ultimate gesture – the blocking of Ormuz – Iran would ask for the opinion from China, who is the buyer of three -quarters of Iranian oil exports. And it is the oil revenues that ensure the budget and the financing of the armed forces in Iran. So it seems to me that China would not see a very good eye a blockage of Ormuz, of which it would also be indirectly victim, both for exports of oil, natural gas, but also for traffic holders, etc. in the Gulf region.
So indirectly, China protects this Strait of Ormuz. But if the prices have skyrocketed, does it still be able to worsen, 15 days from the great summer departures?
No one knows very frankly what will happen within four, five days. Israeli strikes continue.
“The Iranian reaction will come. What form? We do not know. And for the moment, in this uncertainty, oil prices are extremely excited.”
Philippe Chalminin franceinfo
We took around 12% increase, a dozen dollars per barrel. It is a stronger increase than that which we had known in the aftermath of the invasion of Ukraine. So we find ourselves at levels at $ 75 per barrel, which are not historically the highest. In July 2008, a barrel of oil reached its record at $ 147 and that was up to 130 dollars at some times a little later.
Forecastists are also starting to consider $ 130.
It still seems completely excessive to me, insofar as we were just before the events, rather on a bearish trend. The global market was surplus and there were a number of us to think that we would end the year around 60 dollars per barrel. The direct impact on the global market is roughly limited to the 1.5 million barrels day exported by Iran and exported mainly to China. OPEC countries, Saudi Arabia in particular, have 3 or 4 million barrels of available capacity that they can put back on the market. And their interest is not that oil rises beyond $ 100 per barrel.
And for liquefied natural gas, which goes through the Strait of Ormuz, is there also risks of price increase?
Yes, it’s the same problem as for Ormuz. Qatar is the second or third world producer of liquefied natural gas – with the United States and Australia. As much for oil, you can bypass Ormuz – there is starting to be terminals outside the Strait – as much for liquefied natural gas, there is no solution. There, it could, in a fairly considerable way, pull the prices upwards. But I repeat, the blocking of Ormuz, it is really the disaster hypothesis which, with all the precautions that one can take, does not seem completely realistic.
