Australia and the World Past and Present

The latest war with Iran has had a dramatic effect on the price of oil.

Iran accounted for around 3 to 4% of global oil output. But much of this was consumed domestically. Sanctions also presented obstacles to exports.

Nevertheless, Iran did export oil and the vast majority (as much as 90%) went to China.

Additionally, Iran was one of the largest producers of LNG. However, sanctions prevented the development of liquification plants. So LNG exports were very limited. What LNG was exported, travelled via pipeline to countries like Turkey and Iraq.

Iran has responded to the war by closing the Straights of Hormuz.

When we add up the production of neighbouring states, around 20% of the world’s oil and LNG supply passes through the these Straights.

The Iranian regime sees the closure of the Straights as a lever that it can pull.

This was always going to be issue if Iran was attacked.

Was this adequately taken into account by Trump and his administration? Apparently not.

The current conflict has sent the price of oil soaring.

There is no clear end to the conflict on the horizon.

The longer the war goes on, the greater the economic pain felt right around the world.

It is possible that Trump and Israel could halt their military operations as fast as they turned them on.

The situation remains extremely volatile.