The Higher the Price of Oil, the Shorter the Conflict May Last, Economist Says on Iran War

AI Generated Photo

An aerial view of the island of Qeshm, separated from the Iranian mainland by Clarence Strait, in the Strait of Hormuz, on 10 December 2023

Oil prices have an inverse relationship with the duration of wars, meaning that the higher the price of oil, the shorter the conflict may last, an Iraqi economist has said.

Nabil al‑Marsoumi wrote on his Facebook page about the impact of rising oil prices amid Iran's tensions with the United States and Israel.

He said oil prices tend to move inversely with the duration of wars, explaining that a sharp and prolonged rise in prices can place significant pressure on the global economy.

According to al-Marsoumi, a sustained increase in oil prices could lead to higher inflation and create obstacles to economic growth and employment. It would also conflict with one of the strategic goals of the administration of U.S. President Donald Trump, which is to keep gasoline prices low for U.S. citizens.

Meanwhile, following the start of Israeli and U.S. attacks on Iran, the price of Brent crude oil rose to above $92 per barrel.

Previously, Qatar’s Energy Minister Saad Sherida al-Kaabi has warned that Gulf energy exporters could be forced to halt exports within weeks if the conflict involving Iran, the United States and Israel continues, a development that could drive global oil prices to $150 per barrel.

In an interview with the Financial Times, Kaabi said Gulf energy exporters may be forced to halt production within days if hostilities persist, warning that prolonged disruption could significantly affect global energy markets and "bring down the economies of the world."

Kaabi said even if fighting stopped immediately, it could take “weeks to months” for Qatar to return to normal delivery cycles as authorities assess damage and resolve logistical challenges. “Everybody that has not called for force majeure we expect will do so in the next few days that this continues. All exporters in the Gulf region will have to call force majeure,” he told the Financial Times.

The minister warned the impact could extend beyond the energy sector. “This will bring down the economies of the world,” Kaabi said. “If this war continues for a few weeks, GDP growth around the world will be impacted.”

Kaabi also said natural gas prices could rise to about $40 per million British thermal units. Shipping through the Strait of Hormuz—a key route through which roughly a fifth of the world’s oil and gas passes—has slowed sharply since the conflict escalated. At least 10 ships have been hit and insurance premiums have surged.



PUKMEDIA