New Iranian Submarine Threat Could Send Oil to $200 a Barrel
You might wonder how the media – and, more to the point, the oil markets – have missed an important story like this.
On Aug. 8,
However, on CNBC’s Aug. 9 broadcast of “Street Signs,” CNBC contributor John Kilduff, vice president and co-head of MF Global, warned that with this new threat that could endanger the Strait of Hormuz – a major oil shipping point – $200-a-barrell oil is quite possible.
“It's the mother of all oil supply choke points,” Kilduff said. “There's just no two ways about it. Really, it's a pick your number. But I think $200 a barrel, given that we're $80 now, you get an easy double. And, then another 20 percent on top of that gets you to $200. It sounds, well it is horrific. It would be dislocative to the global economy. But it's certainly within the realm of possibilities. And you know, it really feels like it's just a matter of time here before something happens within that strait. As you pointed out and were discussing there, it's only two one-mile wide shipping lanes. So it's easily blocked by various parties. Not just the Iranians.”
Another report had surfaced that a Japanese oil tanker had suffered damage from a terrorist attack, which “Street Signs” anchor Erin Burnett pointed out. The report underscored the vulnerability of energy markets so dependent on a volatile and vital region of the globe.
“Right, that's what brings me to this story that happened a few days ago,” Burnett said. “That was sort of interesting. The markets sort of brushed it off. And I'm wondering what you think about whether that was appropriate. That the
“That's right. You know, it's almost being treated as if you came out of the supermarket and you've got a dent in your bumper in the back of the car,” Kilduff responded. “It was a weird picture on page A8 of whatever paper you want to pick. But you know, add it to the list. I mean, certainly we know that this has been going on. There's been other various attempted attacks in
Kilduff warned that sanctions from the
“Certainly here if we start to see more of these, also the temperature in
With oil treading around $80 a barrel, an attack from
“If the headline hits that there's been an attack on the shipping interest in the
This threat still hasn’t impacted the market. The price of light crude settled up 78 cents on Aug. 9 to right above $81 a barrel.
