Iran Regime Change Potentially Impacts Global Oil Prices

The ongoing conflict between Iran and Israel might lead to a potential regime change in Iran. This situation has prompted experts to warn about disruptions in oil markets due to possible supply shortages.

The main players include the current Iranian leadership, Revolutionary Guard, along with international actors like the United States and Israel. They aim to closely monitor and possibly influence the unfolding situation.

The immediate effect is a spike in oil prices by roughly 10%. Experts warn of potential disruptions in the Strait of Hormuz, affecting global oil shipments and causing wider economic repercussions.

Financial markets are reacting cautiously as oil price fluctuations tend to drive volatility in global commodity and risk asset markets. Concerns about supply chain disruptions are growing increasingly intense. Helima Croft, Head of Commodity Strategy, RBC Capital Markets, stated, “We’re already getting reports that Iran is jamming ship transponders very, very aggressively,” and warned that retaliation could include targeting oil tankers or even trying to block the Strait of Hormuz.

Historical precedents, like the 1979 Iranian Revolution, saw oil prices nearly triple, contributing to a global recession. Similar geopolitical instability has previously led to significant economic ripple effects.

Experts suggest potential outcomes could include further oil price hikes if Iranian oil exports face disruptions. Data points to an average oil price increase of 76% during past major regime changes.