Oil (CL=F, BZ=F) prices rose for a fifth consecutive trading day on fears that escalating conflicts in the Middle East could affect oil supplies. Lipow Oil Associates President Andy Lipow joins Catalysts to discuss the move and the commodity’s outlook as tensions rise in the Middle East.
“The market is really concerned about this escalating tension between Israel and Hezbollah over the Israel-Lebanon border, and whether it could ultimately lead to Israel striking its facilities in Iran. But I don’t think we’ll see a Strait of Hormuz shut down or similar, but the market is pricing in additional geopolitical risk for such an event to occur,” explains Lipow.
He notes that the Strait of Hormuz is particularly important because it is where 20% of the world’s oil supply passes. If it were to be shut down, the price of oil could rise by 30 to 40 dollars per barrel.
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This post was written by Melanie Riehl