Oil Prices Surge as Iran Threatens Critical Shipping Route After US Strikes

Energy markets analyst warns global oil shock could triple previous crises if Iran blocks Strait of Hormuz

Photo by Moslem Danesh on Unsplash

Oil prices jumped more than 2% Monday as Iran threatened to close a critical shipping route following weekend U.S. military strikes on Iranian facilities, raising fears of a global energy crisis that could send fuel costs soaring for Australian consumers.

The escalating Middle East conflict has energy markets on edge as Iran's parliament backed proposals to close the Strait of Hormuz, through which 20% of the world's oil and liquefied natural gas must transit to reach global markets.

Energy markets analyst Saul Kavonic warned the potential supply disruption could dwarf previous oil shocks, including those triggered by the Ukraine war in 2022 and the Iranian revolution in the late 1970s.

"What we're talking about here, if Iran actually carry out what they've threatened to do, would be three times the size of the shocks we've seen in the past," Kavonic told ABC News Australia. "It could drive petrol at the pump to 50% or even double current prices for a period of time."

The warning comes as Australia's political leaders voiced support for the U.S. action while criticizing the government's response to the crisis. Shadow Home Affairs Minister Andrew Hastie said the coalition backs the military strikes aimed at preventing Iran from developing nuclear weapons.

"The coalition supports this military action by the United States," Hastie told Sky News. "It's a good thing because the world cannot afford to have a nuclear-armed Iran, and that's where this was headed."

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