Iran said the world should be prepared for oil to hit $200 a barrel as its forces attacked merchant ships on Wednesday in the blockaded Gulf.
Iran also fired at Israel and targets across the Middle East on Wednesday, demonstrating it can still fight back despite what the Pentagon has described as the most intense U.S.-Israeli strikes yet.
Oil prices that shot up earlier this week have eased and stock markets have rebounded, with investors betting for now that U.S. President Donald Trump will find a quick way to end the war he began alongside Israel nearly two weeks ago.
Trump, who has repeatedly tried to reassure markets this week that the campaign will end soon, told Axios in a telephone interview that there was “practically nothing left” to target in Iran. “Little this and that… Any time I want it to end, it will end,” Trump said during a brief phone interview.
Worst energy supply disruption since 1970s
But so far there has been no let-up on the ground, or any sign that ships can safely sail through the Strait of Hormuz, where a fifth of the world’s oil has been blockaded behind a narrow channel along the Iranian coast in the worst disruption to energy supplies since the oil shocks of the 1970s.
The International Energy Agency, made up of major oil consuming nations, recommended releasing 400 million barrels from global strategic reserves to stabilize prices, the biggest such intervention in history, which was swiftly endorsed by Washington. But the rate at which countries can release it would account for just a fraction of the supply through the Hormuz Strait.
“Get ready for oil to be $200 a barrel, because the oil price depends on regional security, which you have destabilized,” Ebrahim Zolfaqari, spokesperson for Iran’s military command, said in comments addressed to the United States.
Oil prices, which shot up briefly to nearly $120 a barrel on Monday, have since settled around $90, suggesting investors are betting on a swift end to the war and reopening of the strait.