Amid the fears of Iran shutting the Strait of Hormuz, which would severely impact the oil supplies, the US president. Donald Trump has gone on to issue a warning to global oil producers and also urged them to resist in any way a move that could increase the costs. The Strait of Hormuz is one of the most significant oil routes in the world, and almost 1/5 of the global oil supply goes through it every day. On his Truth Social platform on June 23, Donald Trump asked everyone to keep the oil prices down as he is watching. He went on to say that anyone who has the intention of doing it is playing straight into the hands of the enemy.
Trump has also gone on to issue an appeal to raise the domestic oil and gas supply in America.
It is well to be noted that the Iranian lawmakers had threatened to shut the Strait of Hormuz, which is a key commercial shipping channel for oil supply across the world. This step, if it’s taken, will be a result of the retaliation to the US strikes. Any kind of increasing oil prices scenario could as well lead to higher inflation when it comes to American consumers, which may as well become a big political issue for Trump, who has won his second term in the White House on the promise to bring down the prices.
It would also negatively impact his endeavors in order to boost the economy of the US, as all this will lead to growing business costs that would, in turn, cut investments and hence job growth.
It is worth noting that so far, the so far there is no major bent seen towards increasing oil prices and have remained subdued after a 4% spike since the trade began on the night of June 22; however, it pared back soon.
Apparently, on the morning of June 23, the price of a barrel of US oil went marginally up by 0.4% to $74.16 after dipping briefly, while Brent crude, which is the international standard, edged up almost 0.2% to $77.17 for every barrel. Both still remain higher as compared to a week ago, when Iran was not struck.
It is well to be noted that a subdued market reaction goes on to show that investors do believe that Iran is most unlikely to block the Strait of Hormuz, as it itself happens to be a major oil producer and could hence suffer because of the closure. Analysts also go on to suspect if Iran could close the waterway as it itself uses it to move its crude mostly to countries like China and also needs the revenue out of it.
The US secretary of state, Marco Rubio, has said that any attempt by Iran to go ahead and block the Strait would indeed be an economic suicide and hence would draw a huge response from Washington.
