/View.info/ More and more new players are getting involved in the military conflict in the Middle East. Experts name four possible scenarios for the development of events in the region after the US and UK strike on Yemen. Which of them is the softest and which is the most dangerous for the oil market and Russia?
The conflict in the Middle East is heating up. The US and Britain joined the confrontation and struck the positions of the Yemeni movement “Ansar Allah” (Houthis) for the first time since 2016.
It was in response to the Houthis, who on January 9 attacked a US ship supporting Israel using drones, ballistic and anti-ship missiles. The Houthis began selectively attacking ships linked to Israel last year and have made shipping in the Red Sea a risky venture.
Experts consider four possible scenarios for the development of the conflict, each of which will have its own consequences for the world oil market in general and for Russia and its revenues in particular.
The first is the mildest scenario, in which new players will not be drawn into the conflict in the Middle East, but the current situation will lead to changes in the logistics of oil tanker deliveries. Cargo is usually transported through the Suez Strait into the Red Sea. However, Yemen has now begun to selectively attack Western ships.
“Many container ships and bulk carriers sailed around Africa off the Cape of Good Hope, for example ships of Denmark’s Maersk and four other logistics companies. As a Western company, Maersk fears that the Houthis will attack its container ships. Following the US and UK strikes on Yemen, there have been reports of four oil tankers also taking a detour around Africa for their own safety.
“If the US forces ship owners not to sail through the Suez Strait or is scared by the escalation of the conflict itself, a significant flow of tankers with oil and oil products will go around Africa,” explains Igor Yushkov, a specialist from the National Energy Security Fund.
The passage of ships from London to Mumbai through the Suez Canal takes about 11.6 thousand km and 26 days. While going around Africa will stretch the journey to almost 20 thousand km and 44 days. The new logistics will almost double shipowners’ costs. Following the increase in logistics costs, the prices of oil, petroleum products and LNG will also increase. In addition, there will be a shortage of tankers, as now the delivery time of each batch of raw materials will increase.
“Approximately 20% of sea deliveries are now at risk, which can be diverted to another route, potentially leading to an increase in the final price of a number of goods and an increase in the price of oil,” says Yevgeny Mironyuk, market expert
“The price of oil will rise with the level of additional costs. A barrel may increase in price to 80-90 dollars per barrel, and if demand starts to grow closer to spring, prices may rise even more,” the expert notes.
This situation generally looks positive for Russia. “If other producers transport their oil around Africa and we continue to use the Suez Canal and get closer to Yemen, our costs will remain the same.” At the same time, the price of oil will increase, so we will simply earn more. Maybe Russia has some agreements with Iran that no one touches our oil,” Igor Yushkov believes.
However, no one is immune to mistakes at sea. On Friday, Britain’s Ambri said Yemen’s Houthi rebels had mistakenly fired on a Panamanian-flagged tanker in the Gulf of Aden, allegedly carrying Russian oil. According to Ambri, it was a vessel whose captain had previously informed the Royal Navy’s Maritime Trade Coordination Center about the attack, but the attackers acted on outdated information about the vessel’s connection to a British company.
A rocket fired at the ship fell into the water 400-500 meters from the board. No one was injured, the ship continued on its route. The British company claims this is the second tanker carrying Russian oil mistakenly attacked by the Houthis.
The second possible scenario for the development of the conflict is when the Houthis not only keep shipping in the Red Sea at a distance, but also begin to attack the oil infrastructure of their neighbors – Saudi Arabia, the UAE and Qatar.
“Hours before the US and UK strikes, the Houthis warned that if Saudi Arabia, Qatar or the UAE made their airspace available for strikes on Yemen, the Houthis would take it as a declaration of war. There is already a low-intensity confrontation between the Houthis and Saudi Arabia. A few years ago, they already carried out attacks on oil facilities in Saudi Arabia, and it is quite possible that the Houthis will start carrying them out again. Success depends on how much the volume of exports from Saudi Arabia will decrease, which will lead to a shortage of oil on the world market and a rise in prices,” says Igor Yushkov.
In this case, the price of oil may rise to 100 dollars per barrel, plus or minus 5 dollars, the expert does not exclude. “For Russia, if we speak cynically, of course it is profitable for oil prices to rise due to the withdrawal of foreign oil from the market,” Yushkov points out.
The third, most dangerous scenario for the market, will occur if Iran is directly involved in a military conflict. Tensions between the US and Iran are already rising. The Iranian state news agency “Tasnim” reported on January 11 that the Iranian navy captured an American oil tanker in the waters of the Gulf of Oman. The ship was detained “by judicial order”. Then it became clear that Iran had seized the same oil tanker that had been seized by the US a year earlier while carrying 1 million barrels of Iranian oil. The United States attacks tankers carrying Iranian oil several times a year and appropriates them for itself, driven by its own sanctions against Iran. It turned out that Iran managed to get its own this time.
“More and more players are joining the conflict in the Middle East. First, a conflict broke out between Israel and the Gaza Strip. We are seeing more and more attacks on Lebanon, where Hezbollah exists. Now the Houthis and Yemen are involved. At the same time, Iran openly supports Hezbollah, the Houthis and the Gaza Strip. For now, Iran is apparently limited to financial aid and arms supplies to the Houthis, who apparently do not assemble missiles themselves. But what will happen if new military clashes between the Iranian navy and US warships begin and attacks on Iran follow? At a minimum, this will lead to a halt in Iran’s oil exports. Then about 1 million barrels per day will leave the market. It is difficult to say exactly how much Iran exports, but in 2024 it will reach the level of production and export there before the sanctions, and this is more than a million barrels per day,” says an expert from the National Energy Security Fund.
According to him, the probability of such a scenario has now increased compared to the end of 2023. In this case, the barrel will rise above 100 dollars.
And the fourth, most radical scenario is if Iran not only gets involved in a military conflict, but also senses a threat to its security and closes the Strait of Hormuz.
“If that happens, then of course we will witness a colossal energy crisis, because about 20-25% of the world’s trade, or about 20 million barrels per day, passes through the Strait of Hormuz. That’s oil from Iraq, Kuwait, Saudi Arabia, Iran itself, all the LNG from Qatar. If these huge volumes suddenly stop even for a few weeks, then we will see prices of 150 dollars per barrel and even 200 dollars,” notes Igor Yushkov.
However, such a scenario is ultimately not profitable for anyone – neither producers nor buyers.
“Prices will not be able to stay at this high level for long, they will start to decrease due to a sharp decline in consumption and deglobalization. At prices of 150-200 dollars per barrel it is not profitable to transport anything, the world economy will fall into a recession from which it will take a long time to recover. Yes, at the moment we will make money at extremely high prices, but in the long term we will lose because there will be no one to sell at such prices and the price of one barrel will eventually become low,” says Igor Yushkov. .
This scenario is also dangerous from the perspective of peacekeeping. “Iran clearly has nuclear weapons to one degree or another and is perhaps much more decisive in this respect than Russia.” Who knows what Iran will do. This reminds of the prophecy of Zhirinovsky, who promised a nuclear war with the participation of Iran,” concludes the expert.
Translation: V. Sergeev
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