The US leader has vowed to implement sanctions against Iran’s energy industry on November 4 in a bid to completely restrict Iran’s trade of oil.
Iranian President Hassan Rouhani consequently threatened to disrupt oil shipments through the Strait of Hormuz, a strategic waterway for the export of oil from the Middle East, if the US proceeds in implementing the stringent sanctions.
Jacob Shapiro, director of analysis at the think tank Geopolitical Futures, warned that the world would witness a sharp spike in oil prices if Iran were to shut down the trade route.
Speaking to Newsweek, he said: “If Iran decided it had nothing left to lose because US sanctions are effectively killing Iranian oil exports and prioritised looking strong at home over all else, there would be a large, short-term spike in the price of oil.
There would be a large, short-term spike in the price of oil
“After all, about 30 percent of all seaborne-traded crude oil goes through the Strait of Hormuz.”
He nevertheless noted that the surge in oil prices would only be “temporary”, as the waterway would “sooner or later” be reopened.
The temporary shut down may also benefit oil producers in the US and Russia, who would massively increase production from their own oil wells.
Mr Shapiro said: “US shale producers would send production into overdrive.
“Russia would also look to increase production and replenish its much-depleted coffers.”
The expert warned that the closure of the trade route may in fact “ironically be a cash infusion for Russia’s struggling economy”.
He also noted that such a move would be unsustainable for the Middle Eastern nation, as it would result in “foreign intervention”.
President Trump has already threatened military action against Iran in response to President Rouhani’s warning to the US leader.
President Rouhani said: “No one who really understands politics would say they will block Iran’s oil exports, and we have many straits, the Strait of Hormuz is just one of those.
“Mr Trump, we are the honest men who have throughout history guaranteed the safety of the region’s waterways.
“Do not play with the lion’s tail, it will bring regret.”
President Trump responded sharply on Twitter, stating: “Never, ever threaten the United States again or you will suffer consequences the likes of which few throughout history have suffered before.
“We are no longer a country that will stand for your demented words of violence and death. Be cautious!”
Nations including Russia and China have nevertheless rejected President Trump’s threats to block all business trading with Iran from accessing the US market.
China signalled its intention to continue trading with Iran despite warnings from President Trump, as it relies heavily on Iranian oil.
The Chinese Foreign Ministry stated on Wednesday: “China has consistently opposed unilateral actions and long-armed jurisdiction.
“China’s commercial cooperation with Iran is open and transparent, reasonable, fair and lawful, not violating any United Nations Security Council resolutions.
“China’s lawful rights should be protected.”
The country currently imports 650,000 barrels of Iranian oil every day, and has played a central role in the development of key infrastructure in the Middle Eastern nation.
Russia also branded the US sanctions as “deeply disappointing”, and reaffirmed their commitment to the 2015 nuclear deal.