BEIRUT, LEBANON (3:10 P.M.) – An armed conflict between Saudi Arabia and Iran could have a catastrophic impact on the global economy, in particular, the oil markets, Mikhail Mashchenko, an analyst at the eToro social network for investors told RT.
According to Mashchenko, if an armed conflict between the two Middle Eastern nations were to breakout, oil prices could increase by more than 500 percent.
“Energy prices will seriously depend on the severity of the conflict. Let’s remember the unrecognized Iraqi Kurdistan, which in a state of continuous war exported about 550,000 barrels per day through Turkey. In this connection, we can expect a panic rise in oil price to $150-$200 on the first day of the conflict… If Saudis and Iran attack each other’s oil facilities, crude prices can skyrocket to $300,” Mashchenko stated.
Ivan Karyakin, an investment analyst at Global FX, points out that the area of possible conflict pumps a third of global oil.
Saudi Arabia, Iraq, Iran, the United Arab Emirates, Kuwait, Oman, and Qatar together produce about 28 million barrels per day, which is slightly less than 30 percent of global production; prices will go up immediately to $150-180 per barrel, he said.
“Then everything will depend on the duration of the conflict. The world market will survive two or three days of the conflict. If the conflict lasts a week, then prices will rise to $200 or higher, and this will have long-term consequences, as stockpiles will decrease,” Karyakin said.
The analyst insists a war between Riyadh and Tehran is unlikely, as it’s not in the interests of Russia and China.
“Russia is a partner of many conflicting countries in the Middle East. Largest oil importer China, which carries the greatest risks in the event of a rise in oil prices, will use all its influence on Iran and the US to prevent a conflict,” he said.
A war in the Middle East will be very unprofitable for importers, according to Ivan Kapustiansky, Forex Optimum analyst. “In the event of war, markets may lose about 20 percent of the world supply. First of all, of course, the largest importers will be affected. These include the US, China, Japan, as well as the eurozone, in fact, the main locomotives of the world economy,” he said.
While both countries have avoided direct conflict, they are currently involved in a number of proxy wars in the Middle East.
Saudi Arabia and Iran have vested interests in countries like Yemen, Lebanon, and Syria, where they both have had their share of clashes, whether diplomatically through political parties like Hezbollah and the Future Movement, or direct conflict through groups like the Houthi forces and Hadi loyalists.
As of now, both sides appear committed to this Cold War-like conflict in the Middle East; however, with Saudi Arabia’s growing issues with Qatar and Turkey, a future confrontation is possible.