Here’s what could make Iran’s oil war an “economic disaster” – The Nation | Globalnews.ca

Americans woke up to higher gas prices on Tuesday, and some experts warned that the global oil crisis could worsen as Yemen’s Houthi rebels join the war against Iran.

On Tuesday morning, the average price of gas in the US was US $ 4.018 per gallon, according to AAA, which tracks gas prices nationwide.

According to the CAA, which tracks gas prices in Canada, the average price Canadians paid for gas was $1.72 per liter – up 40 cents compared to last month.

Pressure on Canada’s trucking and transportation industry could lead to price pressures across the country, a trucking industry group warned Monday as diesel prices hovered around $2.39 a liter in much of the Greater Toronto Area.

“As transportation costs increase, those costs can flow through to businesses and consumers in the form of higher prices for goods and services,” the Canadian Truck Operators Association said in a statement.

The danger of an extended war with Iran increased on Saturday when Yemen’s Iran-aligned Houthis launched their first attacks on Israel since the war began, even as more US forces arrived in the Middle East.

Israel’s military said it intercepted two drones launched in Yemen on Monday, two days after the Iran-aligned Houthis fired at Israel for the first time since the war began.

The Houthis have yet to target Red Sea shipping, which handles 15 percent of the world’s maritime traffic — but if they do, the impact could be significant, experts say.

If the Houthis attack ships and close the southern entrance to the Red Sea, it could raise prices by $5 to US$10 per barrel, according to Robert Yawger, director of energy futures at Mizuho.

Iran’s successful closure of the Strait of Hormuz, which accounts for about a fifth of the world’s oil and gas supply, has sent oil prices up 57 percent this month, the highest monthly rate in LSEG data going back to 1988, more than the gains made during the 1990 Gulf War.

Meanwhile, the US rose 53 percent for the biggest monthly gain since May 2020.

Kevin Budning, director of scientific research at the CDA, said: “We have seen the Houthis participate in the last few days to attack Israel.

In the past, the Houthis have tried to block the traffic of commercial ships in the Bab el-Mandeb Strait – an important shipping route in the Red Sea.

The Bab el-Mandeb Strait connects the Gulf of Aden with the Red Sea, representing an important maritime link between Europe and Asia. As of 2023, the strait accounted for 12 percent of seaborne oil trade and eight percent of liquefied natural gas (LNG) trade, according to the US Energy Information Administration.

“Vessels that do not pass through the Suez Canal via the Bab el-Mandeb Strait and the Red Sea can go around southern Africa via the Cape of Good Hope, but that route may increase travel time, depending on the origin and destination of the vessel,” the US EIA said.

Normally, it takes an oil tanker 19 days from the Persian Gulf to the Amsterdam-Rotterdam-Antwerp trade hub in Europe via the Suez Canal, the department says. If that oil tanker goes past the Cape of Good Hope, the same trip would take 35 days.

With the Strait of Hormuz under pressure, major oil exporters in the region were already turning to the Red Sea for their shipments.

Saudi Arabia’s crude oil loading at its port of Yanbu on the Red Sea is set to rise to 3.8 million barrels per day in March, shipping data showed last week, after the US-Israeli war against Iran closed off the Strait of Hormuz.

Three more months of war in Iran could cause the price of Brent crude oil to rise, rising to more than US $ 200 a barrel, the report of the global commodity management firm Macquire Group Ltd. warned last week. This will translate to a price of $US7 per gallon at the pumps, it added.

As the global energy market is stable, Canada has an opportunity to step in and meet demand, CEO of Calgary-based TC Energy Francois Poirier said in a speech in Ottawa.

“German Chancellor Merz, Indian Prime Minister Modi and Japanese Prime Minister Takaichi have all expressed their hunger for Canadian resources. That urgency is increasing as energy supplies are disrupted around the world—especially in places like the Strait of Hormuz,” Poirier said, urging Canada to take on ambitious LNG projects.

TC Energy owns the largest natural gas pipeline network in North America.

– via files from Reuters

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