Biggest ‘black swan’ event for oil markets is disruption in the Strait of Hormuz, expert says

[Elderberry]

CNBC by Abigail Ng 1/9/2020

Biggest ‘black swan’ event for oil markets is disruption in the Strait of Hormuz, expert says

Key Points

•   â€œIf we were to see the temperature change and somebody start to disrupt this traffic, that would be the kind of event that would send the markets into the kind of panic we haven’t seen for 10 or 15 years,” Dave Ernsberger, S&P Global Platt’s global head of commodities pricing, said.

•   The Strait of Hormuz is a crucial channel that oil producers use to transport crude from the Middle East to markets around the world.

•   Analysts this week told CNBC that oil prices could shoot through $100 if Iran blocks the Strait of Hormuz.

The biggest black swan event in the oil market is a disruption to the most critical chokepoint in the Middle East, according to an analyst from S&P Global Platts.

“The market is extremely exposed to any disruption to vessel traffic in the Strait of Hormuz,” Dave Ernsberger, the firm’s global head of commodities pricing, told CNBC’s “Capital Connection” Thursday.

The Strait of Hormuz is a crucial channel that oil producers use to transport crude from the Middle East to markets around the world. It is 21 miles wide at its narrowest point and, in 2018, around 21 million barrels were transported via the waterway daily, according to the U.S. Energy Information Administration.

More: https://www.cnbc.com/2020/01/09/disruption-in-the-strait-of-hormuz-is-a-black-swan-event-sp-global.html

[DB]

Iran knows if they take a serious try at it their navy will be gone in hours. Any substantial attempt to send missiles into the straight will end up getting Iran's territory bombed at the launch locations. They don't have a winning hand. Iran could have much of its military destroyed in short order without a single American boot stepping into Iran.

And if its military is seriously damaged they lose containment of their own people.

Again, they don't have a winning hand.

[Bigun]

Iran knows if they take a serious try at it their navy will be gone in hours. Any substantial attempt to send missiles into the straight will end up getting Iran's territory bombed at the launch locations. They don't have a winning hand. Iran could have much of its military destroyed in short order without a single American boot stepping into Iran.

And if its military is seriously damaged they lose containment of their own people.

Again, they don't have a winning hand.

The Mullahs have long overstayed their welcome and are soon to be dealt with!  (I hope and pray!)

[Maj. Bill Martin]

Sure, it may be a "black swan" event for much of the world.  But it would be committing complete economic suicide for Iran itself.

[IsailedawayfromFR]

The only way this will work if Iran is successful in convincing its citizens they have a common enemy so its people will rally around the mullahs.

Risky move as it is not America whose ships will be targeted.

[goatprairie]

Iran sends ships to block the strait.
The U.S. says "get your ships out of the way...RIGHT NOW!!!"
Iran says, "no, you can't do anything."
The next sound you'd hear within a hundred mile radius would be every Iranian ship blown to smithereens along with most of their tactical support and military installations.

[Absalom]

Some 24 centuries past, Iran's ancestors, asserting world dominance, confronted
the Greeks at Arbela; where the Persian Empire was destroyed in less than a day.
The present Iranians are more of the same.