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Newsweek
9 hours ago
- Business
- Newsweek
How Could Strait of Hormuz Closure Impact Americans?
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. Iranian lawmakers have voted to support closing the Strait of Hormuz—a vital route for global oil and gas shipments—in response to U.S. airstrikes on three of the country's nuclear sites on Saturday, a move that if agreed upon by the Supreme Leader, could disrupt energy markets and drive up prices worldwide and stateside. Why It Matters Following U.S. strikes on three Iranian nuclear sites, Isfahan, Fordow, and Natanz, the world waits as Iran considers its response. The Strait of Hormuz is a narrow, yet incredibly strategic waterway connecting the Persian Gulf to the Gulf of Oman and the Arabian Sea. At its narrowest point, the strait is about 21 miles wide, with two shipping lanes that are 2 miles wide in each direction. Around 20 percent of global oil trade passes through the Strait, with any closure likely to spike global prices. What To Know In the first fiscal quarter of 2025, the U.S. Energy Information Agency (EIA) noted that just under 15 million barrels of crude oil and condensate, and about 8 million barrels of petroleum products were transported through the Strait. There are very few alternative routes for the large volume of oil that passes through the chokepoint. The average 20 million barrels of oil products that pass through make up around 20 percent of the global consumption. The price of Brent crude oil was already climbing ahead of the U.S. strikes, increasing from $69 per barrel on June 12 to $74 per barrel on June 13. While the EIA estimates that a large majority, around 80 percent, of the oil-based product moving through the Strait go to Asian markets, around 2 million barrels a day end up in the U.S. Stena Impero being seized and detained between July 19 and July 21, 2019 in Bandar Abbas, Iran as it passed through the Strait of Hormuz, a vital regional shipping channel. Stena Impero being seized and detained between July 19 and July 21, 2019 in Bandar Abbas, Iran as it passed through the Strait of Hormuz, a vital regional shipping channel. Tasnim/Getty Images If the Iranian government following the lead of the parliament, decides to close the Strait, Asian markets are expected to be most hit, but American markets will be too. Despite influence over the Strait, Iran doesn't supply the most oil that transports through it, Saudi Arabia does. Some experts have said that if Iran were to cut off access to the Strait, it could spike oil prices by 30 to 50 percent immediately, with gas prices likewise rising. "Oil prices would likely double, to well above $100. The extent to which that price shock would be sustainable is unclear," Marko Papic, chief strategist at BCA Research, told Newsweek in an email Sunday. He also noted that due to the overwhelming pressure campaign the country would face over its closure "the price shock would be of limited duration." "However," he continued, "it could impact confidence domestically, impact capex [capital expenditure] intentions by corporates, and thus trickle into the animal spirits [psychological factors that influence economic behavior] that affects not just stocks, but also the labor market." Fears that Iran could attack U.S. oil infrastructure in the region and levy its power over the Straits of Hormuz could "combine to make prices and speculation rise about the security and dependability of supply," Greg Kennedy, director of the Economic Conflict and Competition Research Group at King's College London, previously told Newsweek. "Lack of clarity of how long this condition will last will also lead to hoarding or preemptive purchasing by other nations, so there are competition supply fears that will drive up prices," he added. Iran has been reluctant to close to Strait, even during times of intense conflict during the heat of the Iran-Iraq war. Infographic with map of the Gulf showing maritime tanker traffic in September 2024 through the Strait of Hormuz. Infographic with map of the Gulf showing maritime tanker traffic in September 2024 through the Strait of Hormuz. NALINI LEPETIT-CHELLA,OMAR KAMAL/AFP via Getty Images) What People Are Saying Greg Kennedy, director of the Economic Conflict and Competition Research Group at King's College London, told Newsweek: "This is not an act that just stays in the Gulf region, it has wider global strategic ripples." Spencer Hakimian, founder of Tolou Capital Management, wrote on X, formerly Twitter, on Saturday: "There are close to 50 large oil tankers scrambling to leave the Strait of Hormuz right now. Looks like the oil industry is expecting the Strait to be blockaded in the coming days." President Donald Trump wrote on Truth Social on Saturday evening: "ANY RETALIATION BY IRAN AGAINST THE UNITED STATES OF AMERICA WILL BE MET WITH FORCE FAR GREATER THAN WHAT WAS WITNESSED TONIGHT. THANK YOU! DONALD J. TRUMP, PRESIDENT OF THE UNITED STATES." Brian Krassenstein, who has over 900,000 followers on X wrote on Sunday if the Strait is closed, people can expect: "U.S. Gas Prices likely Skyrocket. Potential $5–$7/gallon range depending on duration. Military Escalation Risk. U.S. Navy and allies likely to respond. Tanker delays affect oil, LNG, and related goods." What Happens Next? Any final decision on Iran's response, whether negotiation or closing the Strait or other, however, will largely rest with the country's leader Ayatollah Ali Khamenei. The parliament vote to close the Strait merely advises him of the option to pursue.
Yahoo
2 days ago
- Business
- Yahoo
How a contrarian trade can help you as an investor stay ahead of the Israel-Iran conflict
As President Donald Trump decides whether or not the U.S. will join Israel's attacks against Iran, investors and traders have been considering the scale of a possible disruption to the international oil market. Iran's government might attempt to block shipping through the Strait of Hormuz, which saw a daily average of 20.9 million barrels of oil in 2023, 'the equivalent of about 20% of global petroleum liquids consumption,' according to the U.S. Energy Information Administration. The obvious trade would be to invest in oil-delivery contracts directly or by holding shares of funds that track oil prices or energy stocks. Examples include: Israel-Iran clash delivers a fresh shock to investors. History suggests this is the move to make. Why the biggest-ever 'triple witching' options expiration could deliver a jolt to Friday's trading 'I'm at my wit's end': My niece paid off her husband's credit card but fell behind on her taxes. How can I help her? Why the stock market will be performing a high-wire act over the summer, according to UBS 'I prepaid our mom's rent for a year': My sister is a millionaire and never helps our mother. How do I cut her out of her will? During an interview with Joseph Adinolfi, Marko Papic, chief strategist at BCA Research, said that if Iran blocks the Strait of Hormuz in an attempt to disrupt the world oil market, investors should look further ahead, beyond the obvious, and do these two things. Related coverage: There is so much coverage of generative artificial intelligence and its incorporation into so many products and services that investors might be taking this technological leap for granted. When interviewed by Barbara Kollmeyer for the Need to Know column, Patrick Kelly, who co-manages the Alger Focus Equity Fund ALAFX, said this particular AI industry would 'probably dwarf the size' of the market for smartphones. The Alger Focus fund has a five-star rating (the highest) within Morningstar's large growth category. The Need to Know column provides insights every business morning for investors and traders, with comments from professional money managers. You can sign up here to have it waiting in your inbox. Related coverage: Amazon CEO says AI will mean fewer jobs at the company. Here's his advice on how people can keep theirs. People who are ready to wrap up their careers and have built up retirement accounts face decisions on how to make sure their money will generate enough income for them to live on. And those choices can vary over time. Brett Arends explained how recent bond-market trends have set up an ideal pricing environment for annuities. You might be able to convert some or all of your retirement account into an annuity that provides an income yield of more than 7% for the rest of your life. But annuities aren't for everyone. Arends broke down the decision points and pricing factors. More from Brett Arends: Aarthi Swaminathan covers the residential real-estate market. This week she listed U.S. housing markets with the largest percentages of home sellers lowering their prices. Read on: More builders slash prices as home buyers stay away from the housing market Quentin Fottrell — the Moneyist — helped a woman concerned that if she left money to her niece, the inheritance might be mismanaged. More from the Moneyist: Myra P. Saefong looked into a fascinating development in trading markets for precious metals. Related: Gold is the new 'risk-free' asset as Israel-Iran conflict rattles investors One might think gold and virtual currencies have little in common. But Gordon Gottsegen explained why many individual investors are embracing both. For individual investors: Meme stocks and Robinhood users show why long-term investing is your best bet On Monday, President Trump's sons Donald Trump Jr. and Eric Trump rolled out Trump Mobile — a new mobile-phone service with a competitive monthly price, especially when you factor in extra services that other carriers charge for. You can use your own phone with this service or opt for a Trump-branded gold phone when it is made available. Jurica Dujmovic addressed the controversy surrounding this type of service being offered by the president's family. But he also looked deeply into what customers will get for $47.45 a month, while addressing concerns over data security. Here are 10 things he learned about Trump Mobile. I'm 75 and have a reverse mortgage. Should I pay it off with my $200K savings — and live off Social Security instead? I'm 51, earn $129K and have $165K in my 401(k). Can I afford to retire when my husband, 59, draws Social Security at 62? Tech companies lead list of double-digit gains in June for stocks in the S&P 500 Israel-Iran conflict poses three challenges for stocks that could slam market by up to 20%, warns RBC My mother-in-law thought the world's richest man needed Apple gift cards. How on Earth could she fall for this scam? Sign in to access your portfolio
CNBC
5 days ago
- Business
- CNBC
Oil prices will rise everywhere if Iran moves to close the Strait of Hormuz, says BCA's Marko Papic
Marko Papic, BCA Research macro and geopolitical analyst, joins 'Squawk Box' to discuss the latest developments in the Israel-Iran conflict, implications for U.S. and global markets, the role of U.S. in the conflict, and more.
AU Financial Review
15-06-2025
- Business
- AU Financial Review
Investors can't miss a big lesson from the Israel-Iran conflict
It's far too early to make sweeping pronouncements about the path of the conflict between Israel and Iran. But investors can take comfort from the fact that, so far, the Iranian response has been limited to the option with the fewest implications for markets. As we suggested on Friday, Iranian attacks on either US military installations in the Middle East or Saudi oil infrastructure would have taken this conflict to a different, more worrying place. But the cash-strapped and largely friendless Iranian government seemingly has no appetite for that. Indeed, its appetite for direct retaliation against Israel may also be limited. BCA Research chief strategist Marko Papic says the regime has about 2000 ballistic missiles and is firing 200 of them a day.
CNBC
04-06-2025
- Business
- CNBC
BCA's Marko Papic recommends investing in European telcos
Marko Papic, BCA Research Chief Strategist, joins 'Closing Bell Overtime' to talk international investing as trade talks stall out in the U.S.
