Caishen News reported on October 9th (Editor: Xiaoxiang), S&P Global's Vice Chairman and energy expert Daniel Yergin said on Tuesday that due to the escalating tensions in the Middle East, the global economy is entering an unprecedented "dangerous period".

After the outbreak of the conflict between Israel and Palestine on October 7th last year, the global oil market was not significantly affected at first. Oil prices were under pressure for a long time due to increased U.S. production and weak global demand. However, recent market sentiment is undergoing subtle changes.

Last week, due to concerns that Israel's retaliatory ballistic missile attacks against Iran may target Iran's oil industry, oil prices saw a sharp rise close to double digits. Many industry analysts expressed concerns about the possibility of a real threat to oil supply in the market.

Overnight, oil prices also fluctuated significantly due to various rumors related to the Middle East situation. According to the latest reports from the media on Tuesday, it is still possible for Israel to strike Iran's energy facilities. Some U.S. officials told the media that Israel is considering targeting Iran's energy facilities.

In response, Yergin pointed out during an interview that he expects Israel's retaliatory actions to be not just a replay of April, but even "more intense".

In April this year, Iran and Israel also had intense conflicts, with Iran launching hundreds of ballistic missiles and drones at Israel in retaliation for Israel's attack on Iran's diplomatic facilities in Syria. However, ultimately both sides managed to avoid a full-scale war.

When asked whether the global economy is on the edge of another supply shock caused by the tense situation in the Middle East, Yergin stated that it is currently an unstable period for the market.

"I believe this is a very dangerous moment, one that we have never seen before," Yergin said.

Although Yergin insists that it is still uncertain whether Iran has operational nuclear weapons, he said, this "is definitely a background," especially from an Israeli perspective.

"Our bet is that Israel currently will not attack or attempt to attack Iranian nuclear facilities. However, in a few months or even weeks - whenever, Iran could possibly have the ability to transport nuclear weapons, which raises the stakes," he likened this moment to the 1962 Cuban missile crisis.

The worst-case scenario is Iran taking action by blocking the Strait of Hormuz. The Strait of Hormuz is widely recognized as the most important global oil transportation chokepoint. This waterway located between Iran and Oman, although narrow, holds significant strategic importance, connecting the Middle East's crude oil-producing countries with major markets worldwide.

According to the U.S. Energy Information Administration (EIA) data, the average oil flow through the Strait of Hormuz in 2022 was 21 million barrels per day, equivalent to approximately 21% of global crude oil trade volume. Even a temporary blockage of this transportation chokepoint could lead to a global energy price surge, increased transportation costs, and severe supply delays. For many energy analysts, the blockade or severe disruption of the Strait of Hormuz is seen as the worst-case scenario - which could result in oil prices well above $100 per barrel.

Bjarne Schieldrop, the Chief Commodity Analyst at SEB Bank in Sweden, stated that the general rule in the commodity market is that if supply is severely restricted, prices typically soar to 5 to 10 times normal levels.

Schieldrop mentioned in a recent research report, "Therefore, if the situation deteriorates and the Strait of Hormuz is closed for a month or longer, the Brent crude price may soar to $350 per barrel, plunging the world economy into distress, even though oil prices may fall back below $200 per barrel at some point."

"However, looking at current oil prices, the market does not seem to consider the likelihood of such a development to be high," he added.