The strikes on Iran show why quitting oil is more important than ever |
As Israel and the United States strike Iran, global oil markets are on edge.
Oil prices have begun rising even before any disruption to supply. Oil traders are factoring in the possibility the Strait of Hormuz might close.
Roughly 20% of the world’s traded oil passes through this narrow waterway between Iran to the north and Oman and the United Arab Emirate to the south. One oil tanker has been bombed and traffic has all but halted. In global energy markets, the mere threat of interruption can push prices higher.
Oil isn’t like most commodities. Control of the energy-dense fuel shapes geopolitics. Three-quarters of the world’s population live in countries dependent on oil imports for cars, trucks and other uses. Controlling the flow of oil and, increasingly, gas, has long been used as leverage, from the oil shocks of the 1970s to Russia cutting European gas supplies in 2022.
Any serious disruption to tanker traffic in the Gulf would send shockwaves through global oil markets and threaten economic stability. Long queues have already been reported in Australia as motorists vie to fill up before possible price spikes.
As international tensions increase, nations from Cuba to Ukraine to Ethiopia are accelerating plans to reduce their oil dependence and boost energy security.
Half a century of oil leverage
The power of oil became obvious during the 1973 oil embargo, when major Middle East oil producers slashed supply in a bid to reshape US foreign policy. Prices quadrupled, economies stalled and energy security became a central political........