An Oil Strategy in Case Iran Shuts Down Strait of Hormuz: View - Bloomberg

Let’s just say Iran makes good on its recent threats to shut down the Strait of Hormuz. And let’s say that with one-fifth of the world’s oil supply bottled up, the price of a barrel of oil then almost doubles, as some analysts predict, to more than $200.

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Pipelines that circumvent the strait could carry to market at least 7 million of the 17 million barrels of tanker-borne oil that passes through the strait each day. The U.S. could, for the third time since the Gulf War in 1991, release oil from its 700 million-barrel Strategic Petroleum Reserve ; other members of the International Energy Agency (set up after the 1973-74 oil crisis) could also tap the 90-day supply stocks that they are required to maintain. The IEA has already prepared a plan to release as many as 14 million barrels a day in the event of a Gulf closure. Saudi Arabia, long the self-appointed swing man of the Organization of the Petroleum Exporting Countries, has a spare production capacity -- on paper, at least -- of about 3 million barrels per day; everyone else is producing almost flat out.

An Oil Strategy in Case Iran Shuts Down Strait of Hormuz: View - Bloomberg