Developments in the Iran-Israel conflict in the next three to five days will be critical to global energy markets even though oil and gas supplies from the Gulf have not yet been disrupted, oil historian Daniel Yergin said on Wednesday.
Iran and Israel launched new missile strikes at each other on Wednesday as the air war between the two longtime enemies entered a sixth day despite a call for Tehran’s “unconditional surrender” from U.S. President Donald Trump after he left a Group of Seven summit early over the crisis.
“We now appear to be at the climax of a 46-year battle,” said Yergin, the Pulitzer Prize-winning author of “The Prize” and vice chairman of S&P Global, in an interview on the sidelines of the Energy Asia conference, referring to the Iran hostage crisis, which started in 1979.
“The Trump administration is doing some very clear signalling. The president leaving the G7 meeting early is a very big message. This is an unprecedented situation,” he said.
Oil prices surged on Friday after Israel attacked Iran and have remained volatile although there has been no disruption to energy supplies from the Gulf.
Yergin noted U.S. President Donald Trump’s recent comments signalling possible talks.
“At this point, the question is – who would negotiate on the Iran side? It looks like the channels of communication and decision making in Iran themselves would have been disrupted,” Yergin said.
“The bunker buster bombs weigh heavily on the negotiating table.”
Iran has threatened to block the Strait of Hormuz, a critical waterway between the Gulf and the Gulf of Oman for about a fifth of the world’s total oil consumption.
“If the Hormuz was blocked, it would, of course, immediately register in oil prices,” Yergin said.
“But I think it should not be underestimated that the U.S. Navy has had about 40 years to prepare for what to do so it’s not like it would remain blocked, and there would be a high price for those who blocked it.”
(Reporting by Florence Tan; Editing by Kate Mayberry)