World faces worst oil risk since 1970s, Deutsche Bank says
The world faces its worst oil supply threat since the late 1970s and early 1980s amid potential disruptions in the Middle East and Africa, according to Deutsche Bank AG.
"We view a blockade of the Strait of Hormuz as a low probability given the serious economic damage it would have on Iran itself," Soozhana Choi, the Singapore-based head of Asian commodities research at Deutsche Bank, said in a report today. "The mere utterance of such a threat is a grave concern for the oil market given the strategic importance of the strait on a global scale," she said.
Brent crude rose to about $119 a barrel on the ICE Futures Europe exchange in London today, and is up about 12 percent this year, boosted by concern that the Islamic republic may block the strait. About 20 percent of global crude supplies flow through the 34-kilometer-wide (21-mile wide) waterway.
Members of the Organization of Petroleum Exporting Countries have enough spare crude production capacity to cover any loss of Iranian exports, "but not the totality of the potential disruptions," the bank said, refering to output cuts in Sudan, Yemen and Syria.