A familiar stop: the economy is adapting to the crises around Hormuz
The global economy did not experience a shock effect after the actual suspension of shipping in the Strait of Hormuz. Oil remains in the range of $80 per barrel and will jump to $100 and above only in the case of an onshore operation in Iran, experts predict. At the same time, rising gasoline prices in the United States could hit Donald Trump's ratings in the future. Ahead of the November congressional elections, the White House is unlikely to escalate further. About why world markets are reacting so much to the next round of escalation in the Middle East, see the Izvestia article.
Why has shipping in Hormuz actually stopped?
The conflict between the United States and Iran has escalated dramatically again, with the Strait of Hormuz at the center of events. According to Bloomberg, after new attacks from both sides, tanker traffic along this strategic route has almost stopped. Immediately after the escalation began, only 14 ships passed through the Strait on July 8, the lowest level of traffic since the signing of the June memorandum of truce.
It was violated after the Islamic Revolutionary Guard Corps, according to the United States, Qatar and Saudi Arabia, attacked three tankers in Hormuz, although the IRGC did not confirm this. The Iranian military was angered by the fact that the ships were traveling along the so—called American route - along the coast of Oman, Vladimir Sazhin, a senior researcher at the Institute of Oriental Studies of the Russian Academy of Sciences, explained to Izvestia. Tehran has always insisted that ships should only sail along the approved route.
—We once again declare that foreigners have no right to this land and the Strait of Hormuz,— the IRGC said.
The United States has launched massive strikes on Iranian facilities. Donald Trump called it retaliation for the previous IRGC attack. "They attacked three ships. If they strike at us, we will strike them 20 times," he said.
Now American shells are flying into the area of the Iranian nuclear power plant in Bushehr, which threatens the region with a nuclear catastrophe. In response, Tehran has hit a number of countries in the Middle East. The Muwaffaq Salti airbase in Jordan, the Patriot air defense base in Kuwait, a satellite dish in Qatar and US fuel tanks in Bahrain came under fire.
Trump angrily announced that the United States was withdrawing from the negotiations, after which the US Treasury restored sanctions on Iranian oil and ordered all previously concluded contracts to be curtailed by July 17. Thus, the parties entered another round of escalation. According to Axios, the US administration assumes that a new stage of hostilities may last up to several weeks.
But despite the exchange of blows, the chances of diplomacy remain. Qatari Prime Minister Mohammed bin Abdulrahman Al Thani spoke on the phone with Iranian Foreign Minister Abbas Araqchi. After that, the Government of Qatar expectedly stressed the importance of returning to dialogue. According to the plan, the next round of negotiations between the United States and Iran was scheduled to take place on July 11 in Pakistan. However, given the current round of escalation, its prospects are very vague. Araqchi recently stated that negotiations with the United States on a final agreement are impossible as long as threats persist.
What awaits the global economy after another escalation
Another escalation around the Strait of Hormuz threatens to inflate oil prices again and leave dozens of European and Asian countries without stable fuel supplies. By the morning of July 9, Brent quotes on the ICE exchange had already risen to $78.78 per barrel, the highest since June 20th. However, there was no shock this time. The new escalation has only returned the global market to the nervous state it was in a couple of months ago.
Most likely, oil prices will rise to $85-90 per barrel and will fluctuate depending on the alternating closures and openings of the Strait of Hormuz, says Valery Andrianov, associate professor at the Financial University under the Government of the Russian Federation. At the same time, Dmitry Kasatkin, managing partner of Kasatkin Consulting, is confident that the range will be limited to $75-85 per barrel.
— If the diplomatic channel continues, prices may gradually stabilize. If the conflict starts affecting physical supplies, the reaction will be disproportionately harsh," the expert explained to Izvestia.
Such an adaptation of the global economy to the crises around Hormuz still does not negate the long-term risks. The resumption of strikes deprives the market of chances to restore oil production to the level of February 2026 during the peak demand season, Alexander Frolov, Deputy Director General of the Institute of National Energy, said in an interview with Izvestia. The filling of Europe's gas storage facilities is also questionable: local businesses hoped to bring down prices due to August supplies from Qatar. Now, the chances of an influx of Qatari LNG by the end of the summer are fading before our eyes, the expert notes.
Russian oil follows global quotations, so its price will inevitably rise following the global market, predicts Dmitry Scriabin, portfolio manager at Alfa Capital Management Company. Moreover, if strict export restrictions are imposed against Iran again, this may significantly reduce the discount at which raw materials are currently sold from the Russian Federation.
A rise in prices to $100-150 per barrel is realistic only in the case of a US ground operation in Iran, warns Valery Andrianov, associate professor at the Financial University. On the other hand, a pullback of quotations to $60 is also completely unprofitable for Washington. A drop in prices to this level will hit the American oil sector and make many shale projects simply unprofitable.
However, the escalation of the conflict is not in the interests of Trump himself either: it will inevitably raise prices at American gas stations, which is extremely dangerous before the November congressional elections. In the United States, the cost of gasoline directly affects the positions of the current president. For example, in 2022, when the price of a gallon rose to almost $5, approval of Joe Biden's economic policy collapsed below 30%. Therefore, after another round of strikes, the White House is likely to try to return the situation to a diplomatic channel.
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