Economics Expert Wan Zhe: Strait of Hormuz Resumes Navigation, Oil Prices May Quickly Fall Below $100
Svmuu According to Wan Zhe, an economics expert and professor at Beijing Normal University, historically, the duration and magnitude of oil price increases triggered by Middle East conflicts still depend on the development of the geopolitical situation. Looking at the current situation, the scale of the supply shock may exceed that of previous instances. The supply gap caused by the closure of the Strait of Hormuz could account for 15% to 20% of global supply. Furthermore, geopolitical uncertainty is higher, the risk of conflict spillover is still escalating, and there is even a risk of it expanding into a full-scale Middle East conflict. Market panic is stronger than during historical regional wars. Regarding future oil prices, if the conflict maintains its current intensity, the Strait of Hormuz remains closed, the Houthi forces continue harassing but do not fully blockade the Bab el-Mandeb Strait, and there is no major diplomatic breakthrough, prices should still remain above $100. If the Bab el-Mandeb Strait is blockaded, causing the two major core channels to be simultaneously disrupted, and the conflict expands to more countries, prices will certainly continue to surge higher. If a major diplomatic breakthrough occurs and the Strait of Hormuz resumes navigation, oil prices may quickly fall back below $100. (CCTV)
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