Scenarios for prices up to 2.8 euros per liter

If the tenses relations between Israel and Iran develop into open conflict, then the price of crude oil Brent oil on the London Stock Exchange and US crude oil in New York may jump to $150 from $90 today.

This assessment was also heard last September, when Hamas attacked Israel. It was not verified, as then the price of brent went up to 95 dollars a barrel to finally balance at 90 dollars in the last weeks. However, according to well-informed sources, the global market and governments are holding their breath.

In fact, they estimate that this time the situation is worse than last September, where Iran was not directly involved. Now the situation is different and everyone knows that the only “nuclear” weapon it possesses – and which is considered certain to be used by the mullahs – is the blockade of the Straits of Hormuz. This means that the planet will be deprived of fuel corresponding to 38% of global consumption.

This will mean a sharp jump in the price of oil, even to $150 as estimated by international houses, with all that entails. It is noted that in the past once again (June 2008) oil reached 143 dollars per barrel. At that time, the price of gasoline shot up from 0.90 euros per liter to 1.2-1.3 euros per liter, i.e. up to 45% within a few weeks.

Gasoline horror scenarios

The equivalent today with the excessive taxation that has been imposed, would be for gasoline to reach 2.8 euros per liter. Fortunately, however, in 2008 the price of oil was not kept at these levels for long, as China’s strong growth during that period limited the looming recession in the West, which had manifested itself with the subrimes crisis and the collapse of American banks. By the end of the year the price of Brent had even fallen below $50 a barrel.

But what will such an honor mean for the country and its recovery?;

• The first thing that will happen will be a new “bleed” for fuel imports. This increase is expected to drag up the prices of other energy goods as well, as happened in 2021-2022 where natural gas dragged up the price of fuel.

• The second that will follow is the increase in the production and transport costs of goods and the creation of new and stronger inflationary pressures. Where the West saw and had to get rid of inflation, new inflationary pressures will be invited, possibly even greater than those of the last two years.

• The third thing that will happen is the removal of the possible reduction in lending rates. The central banks have reportedly entered the logic of reducing interest rates, given the downward trajectory of inflation. And the markets, including the Greek market, are waiting for this reduction in the cost of money to encourage more investment.

It is noted that this crisis will affect the planet horizontally and not only Europe, as happened in the last natural gas crisis. And this is because, according to TradeWinds, the Persian Gulf passes through:

• 44% of European oil imports (203 million metric tons)
• 78% of Japanese oil imports (96 million m3)
• 61% of India’s imports (130 million m3)
• 53% of China’s imports (53 million m3)
• 96% of Africa’s imports (21 million mt).

The only “winner” from the closure of the Straits of Hormuz is the USA which imports only 7% of oil. Of course, the Russians, the Saudis, Venezuela and other countries producing oil or other energy goods that do not depend on the Straits of Hormuz will also benefit from such a conflict. Economies such as Qatar, Iraq and Iran are at risk of economic collapse.

For our country this will be tragic. Every time its economy gets going, something happens and it stops. We saw it in the pandemic, in the Russian-Ukrainian war, but also in the last inflationary crisis that drove interest rates to a very high level. Investments in our country are already slowing down, as shown by ELSTAT data, but also by the report of the governor of the Bank of Greece, Giannis Stournaras.