Oil prices will rise everywhere if Iran moves to close the Strait of Hormuz, says BCA's Marko Papic

Geopolitical Risk & Oil Market Impact - The primary concern for investors is Iran's potential disruption of energy supply through the Straits of Hormuz, overshadowing other developments like US or Israeli attacks [1] - Current oil price levels do not adequately reflect the risk associated with potential Iranian intervention in the Straits of Hormuz [1] - Even a limited US attack on Iranian facilities like Fordo might not provoke an Iranian response of closing the Straits of Hormuz, due to the potential for a devastating US counter-attack on Iran's energy and industrial infrastructure [1] - Historically, Iran has been hesitant to disrupt energy supplies via the Straits of Hormuz, even during the Iran-Iraq War (1980-1988) when it faced widespread international opposition [3][4] US Foreign Policy & Middle East - Regime change efforts in the Middle East have historically led to instability and power vacuums, making significant US involvement in Iran a potentially risky strategy [1] - A limited, isolated US strike on Iran, followed by a call for negotiations, could be a viable strategy to de-escalate tensions [2] Global Power Dynamics - China relies on the US Fifth Fleet to secure its energy imports from the Middle East, creating a paradoxical situation where US military presence benefits China [1] - Russia's alliance with Iran is being questioned due to the ineffectiveness of Russian-made defense systems against Israeli attacks, potentially diminishing Russia's appeal as an ally [1] Economic Considerations - US energy independence is irrelevant if Iran closes the Straits of Hormuz, as oil prices would rise globally, impacting the US economy [1] - Rising oil prices due to escalating tensions could negatively impact President Trump's agenda on inflation [1]