Oil prices have seen sharp jumps recently, with Brent crude gaining 5.5 percent to settle above $76 a barrel, while West Texas Intermediate crude rose to nearly $75. This surge came following Israeli strikes targeting Iranian sites, (most notably the South Pars gas complex.) You are talking about oil, not gas.

The Israeli- Iran war has increased market uncertainty and led to the cancellation of Iranian-US nuclear talks, further exacerbating tensions. This escalation also affected financial markets, with oil briefly rising by more than 13 percent, and investors rushing to safe havens like gold.

The $150 key

Analysts stated that a rise in oil prices above $100 per barrel would be a "virtual outcome" if the Strait of Hormuz were to be closed. They added that Saudi Arabia, despite its strategic alternatives, would face significant challenges related to the stability of global markets. They also emphasised that the impact of closing the strait would be disastrous, not only for countries like Kuwait, Qatar, and Bahrain, which are completely dependent on it, but for global markets as a whole.

Mukesh Sahdev, an analyst at Rystad Energy, said: "A potential closure of the Strait of Hormuz by Iran remains the most significant game-changer for oil markets." For his part, security analyst Riad Kahwaji asserts that Tehran's threats to close the Strait of Hormuz are not new and are being used as a "tool of pressure." He points out that Gulf States, including Saudi Arabia and the UAE, have taken proactive steps to ensure the continuity of their exports beyond the strait, such as establishing alternative pipelines.

Jassim Ajaka, an economics specialist at the Lebanese University, explains that the project to build an oil pipeline linking eastern Saudi Arabia to western Saudi Arabia, which dates back to the 1980s, is of utmost importance in light of the current geopolitical situation. Jassim warns that "an escalation that expands geographically and temporally" will significantly and tangibly impact the Strait of Hormuz, threatening dangerous repercussions due to the uncertainty of Iran's response. This could lead to unprecedented price increases, with increased insurance costs and a rise in global commodity prices.

Former Egyptian Petroleum Minister Osama Kamal agrees, asserting that the Saudi East-West Pipeline represents "the backbone of the country's strategy to secure its exports beyond the strait," giving Riyadh "greater flexibility and negotiating power in global energy markets."

Wafaa Ali, a professor of economics and energy, confirmed that Saudi Arabia and the UAE would be least affected by a Hormuz closure scenario, thanks to their "global reserve network" and alternative ports such as Yanbu. However, she believes that "continued military operations will increase the likelihood of oil prices exceeding $100 per barrel, given the absence of immediate solutions to replace these large quantities."

Medhat Youssef, former deputy head of the Egyptian General Petroleum Corporation, also noted that closing the strait would not simply be a supply crisis, but rather "a turning point in global energy markets as a whole." Youssef predicted "an era of geopolitical energy," with military considerations dominating the oil pricing landscape, and prices could rise to record, unpredictable levels.

Financial advisor Mahmoud Atta noted that tensions have already impacted markets, with insurance costs for oil shipments in the region rising and investors seeking safe havens. He expects this trend to continue if the escalation expands.

Financial institutions

Major financial institutions share these concerns. JP Morgan stated: "The current escalation in the Middle East could bring back oil price scenarios to above $85 per barrel if oil flows through the Arabian Gulf are directly disrupted." Goldman Sachs also said: "The Strait of Hormuz will remain the most sensitive factor for markets, and if supplies are truly threatened, markets will experience significant price spikes that may be difficult to contain."

Possible reality

In light of these facts, global oil prices reaching $150 per barrel does not seem an unlikely scenario at all, and could become a reality if the geopolitical situation deteriorates further. Despite Saudi Arabia's robust infrastructure and strategic alternatives, it will not be immune to the repercussions of a potential "global energy crisis" if the Strait of Hormuz is closed or major supplies are significantly disrupted.

Global markets appear extremely fragile in the face of an energy shock of this magnitude, placing the world on the cusp of a "geopolitical energy era" that could reshape the international economy for decades to come.

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Photo: An oil tanker in the Strait of Hormuz (by Adobe)