Iran’s Response Unfolding: Analysts Eye “Energy Attacks” Risk

Analysts at RBC Capital Markets are cautioning that Iran’s response to recent US actions could involve “energy attacks” from Iranian-backed militias operating near Iraqi facilities, warning against a “kneejerk ‘the worst is behind us’ hot take.” They emphasize that it could take “days or weeks” for the full extent of Iran’s response to become clear, suggesting ongoing volatility. This assessment comes as the International Monetary Fund’s chief, Kristalina Georgieva, warns that US strikes on Iran could significantly damage global growth, primarily through their impact on oil prices.
The immediate backdrop to these warnings is the Iranian parliament’s recent vote to consider closing the Strait of Hormuz, a critical shipping lane for a fifth of the world’s oil consumption, in retaliation for a US attack. Such a move would create an immediate oil supply shock, leading to surging energy prices, increased inflation, and a likely deceleration of global economic activity, creating widespread ripple effects.
Oil prices initially responded with a jump of over 5% on Sunday, reaching a five-month high of $81.40. However, prices later retreated, with Brent crude falling nearly 1% to just over $76 a barrel on Monday. Despite this, the potential for dramatic increases remains, with Goldman Sachs estimating oil could hit $110 a barrel if Hormuz flows are substantially reduced for an extended period.
In diplomatic efforts, US Secretary of State Marco Rubio has called any closure of the strait “economic suicide” for Iran and has urged China to use its influence, given its heavy reliance on the waterway. The reported U-turn of two supertankers in the Strait of Hormuz further illustrates the immediate impact of heightened tensions on maritime operations, underscoring the ongoing volatility and the need for vigilance.