25 June 2017 | Panos Mourdoukoutas | Forbes
The original title of this item was: The Coming War Between Saudi Arabia And Iran Will Make American Frackers Very Rich. The author, who is said to cover ‘global markets, business and investment strategy’ claims that such a war would increase oil prices thereby allowing US ‘frackers’ to make a killing. So to speak.
That, he says, is why ‘Washington may do little if anything to stop a direct war between the two old adversaries.’ He is proudly assuming, of course, that said frackers or their sons would not be called on to fight such a war once it spreads to America. JP
Saudi Arabia and Iran are moving closer to a direct military confrontation that has the potential to disrupt Middle East oil supplies and push crude oil prices back towards the $60, even $100, level.
That’s a dream scenario for American frackers who will have to pump oil as fast as they can to make up any supply shortfall to America’s allies.
For several years, Saudi Arabia and Iran have been trying to resolve their religious and political differences by fighting proxy wars that had little impact on oil prices. For a simple reason: they didn’t want to cause any disruptions in the flow of oil from the Persian Gulf. Besides, Washington has been the de facto guarantor of the free flow of oil from the Gulf to its Asian and European allies.
Recently, there are signs that the two adversaries are moving closer to a direct war, however, raising the possibility of a “military accident”in the Persian Gulf. That could disrupt Middle East oil supplies, sending oil back to $60 or even $100 in a matter of months, if not weeks.
“In case there is ‘a military accident’ in the Arabian Gulf, the oil supply route could be seriously disrupted,” says Athens based shipping expert Theo Matsopoulos. “When the markets are in critical point they are more sensitive and they translate facts more violently than they would during times of stability.
“It is not necessary for the Strait of Hormuz to be fully blocked, as happened in the Suez Canal in 1956. The expectation of a blockade and the potential for disruption could cause turbulence and shape a bullish market for crude oil. All of the affiliated parties will need to be hedged and they will start buying long positions, inflating the price to levels above $60/barrel.”
That’s certainly a dream scenario for American frackers, as they will pump oil as fast as they can to fill in the gap generated from the shortfall in the middle supplies.