Shell boss warns of ‘huge impact on trade’ if Israel-Iran conflict escalates

The CEO of Shell and Will SAN warned that the exacerbation of the conflict between Israel and Iran could provide a great shock to the global economy, as geopolitical tensions threaten to strangle one of the most important ways of energy supply in the world.

Speaking at a energy conference in Tokyo, Swan said that Shell put emergency plans in the event of disturbances in oil and gas flows from the Middle East. He said that the blockage of the Strait of Hermoz – the narrow waterway that connects the Persian Gulf with the Indian Ocean, through which about 25 % of the world’s oil permits – will have a “great impact on world trade.”

“If this artery is banned, for any reason, it has a major impact on world trade … We have plans in the end that things are deteriorating,” SAN said.

This warning comes amid increasing tensions in the region and the increasing speculation that the United States could intervene militarily, after Donald Trump’s suggestions that the United States may enter the air war. “I may do it, I may not do it. I mean, no one knows what I will do,” the president said on Wednesday.

Oil markets have already responded to volatility. Brent crude rose about 1 % to more than $ 77 a barrel on Thursday, as investors priced the risk of disrupting the offer. The activity of the carrier in the region has also become much more expensive. Clarinson’s research data reported by the Financial Times, the rate of the daily crude company (VLCC) on the Gulf Road to China rose from $ 19,998 before the Israeli strike last week to $ 47,609 by Wednesday.

The increase of 138 % in the rate of charter increases increasing by 12 % in the dirty Baltic index, which tracks the costs of charging crude oil worldwide. Analysts attribute the jump to an escalation of concerns about the safety of mobility in the Strait of Hormuz, with the intervention of navigation signals already reported in the Persian Gulf.

“What is a special challenge in particular is some of the confusion that is happening,” Swan said, noting the disturbances of the GPS marine system and communication systems in the region.

Financial markets responded with caution to developments. On Thursday, global stocks fell slightly, while investors have turned money into safer assets such as gold and US dollar. Gold rose 0.1 % to $ 3,372.36 an ounce, while the dollar gained a ground against the euro, the Australian dollar and New Zealand.

Kyle Rodda, chief analyst at Capital.com, said the uncertainty about the United States’ response is to feed the investor’s concern.

He said: “The market participants are still separated and uncertain. Speculation is still widespread – perhaps strategic by the Trump administration – that the United States will enter it, which would represent a financial escalation and can invite direct revenge against the United States by Iran.”

Rodda added that any participation in the United States will significantly raise the danger of a regional war war, with consequences that may exceed the Middle East, which amounts to global energy supplies and economic growth.

The Strait of Hormuz is often described as the most important transitional point in the world. About 21 million barrels of oil per day flow through the corridor, which is only 21 miles width in the narrowest point. The turmoil – whether through military conflict, sabotage or siege – can send oil prices and intensify the pressure of inflation, just as central banks begin to reduce monetary policy.

Executive managers and policy makers in the field of energy are closely seen developments, especially since shipping companies and charter companies begin to control the risk installments for ships that travel across the Gulf.

Shell, one of the largest traders in the world in LNG (LNG) and raw oil, has a deep exposure to energy markets in the Middle East. The company’s emergency planning comes amid wider efforts throughout the sector to ensure that the continuity of the supply is escalating.

With the high tensions and hormonal strait under threat, the coming days can be proven axial – not only for global energy security, but for the stability of the wider global economy.