Goldman Sachs predicts that oil prices could double if the disruptions caused by Yemen’s Houthi rebels extend to the Strait of Hormuz, according to Daan Struyven, the head of oil research at the financial institution. The Houthi rebels have effectively blocked shipping in the Red Sea, targeting vessels they believe are linked to Israel due to solidarity with the Palestinians amid escalating hostilities with Israel and Hamas.
While Struyven deems a disruption of the Strait of Hormuz for a month as unlikely, he warns that such an event could lead to a 20% increase in oil prices and potentially double them if interference in the strait persists. Despite considering this scenario highly improbable, Struyven aligns with numerous analysts in the energy sector expressing concern over the situation.
Ongoing Houthi attacks have compelled global shipping companies to reroute vessels around the Cape of Good Hope, increasing travel distances by around 6,000 nautical miles and causing significant delays and increased shipping costs. The attacks, ongoing for weeks, pose a substantial threat to the flow of commercial goods through the Red Sea and Suez Canal, vital trade routes connecting Asia and Western countries. The Houthi militants have launched missiles numerous times in response to the Israel-Hamas conflict, further escalating tensions in the region.