What War with Iran Could Mean for Oil Prices

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Last week, President Trump surprised the whole world by announcing that essentially, the No. 2 leader of Iran had been killed in a U.S. drone strike in Baghdad. Politically, the future is very uncertain; economically, this development could have a big effect on how we spend. It could also take a long time to manifest, if at all.


As with any unrest in the Middle East, investors are concerned about the price and availability of oil. While Iran produces a little more than 5 percent of the world's oil, the United States gets far more crude oil from Saudi Arabia, Kuwait, and Iraq. However, analysts have pointed out that geopolitically, Iran could disrupt shipments out of the Straits of Hormuz, which connects the Middle East to the Persian Gulf. Iran could also lean on its large network of militias and allies to further interfere with oil production and refinement.

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What's important to note now, however, is that it's early days and we don't know anything yet. All kinds of events can mess with oil prices, some of which don't get noticeably passed onto consumers. Petroleum is a global, changeable industry, with all the complexities that entails. Fossil fuels in general may even be their own economic bubble, ready to burst (or endure) for myriad other reasons. It's true that volatility in the energy sector can create consequences for all of us, but for right now, it's best to stay informed with reliable sources and level-headed reports. Anyone rushing anyone else into a decision in situations like these almost certainly has their own agenda afoot.