Oil prices could jump to $200 a barrel if US and Iran go to war

Military conflict between the United States and Iran would threaten to shut the world's busiest seaway for oil exports and send crude prices to all-time highs, perhaps even to $200 a barrel, according to one analyst.

President Donald Trump on Sunday night warned Iranian President Hassan Rouhani on Twitter that his country would "SUFFER CONSEQUENCES THE LIKES OF WHICH FEW THROUGHOUT HISTORY HAVE EVER SUFFERED BEFORE" if Rouhani ever threatened the United States again.

Trump appeared to be responding to comments over the weekend from Rouhani, who said, "Iran's power is deterrent and we have no fight or war with anybody but the enemies must understand well that war with Iran is the mother of all wars," according to an English translation on the Iranian president's official website.

The rhetoric has been heating up as the first of two U.S.-imposed deadlines for international businesses to cut ties with Iran approaches next month. By November, the United States expects most oil buyers to reduce purchases of Iranian crude to zero, or else face U.S. sanctions.

In May, Trump pulled out of an international nuclear accord with Iran and restored sanctions against the nation, the world's fifth biggest oil producer.

This weekend, Iran renewed its threats to shut the Strait of Hormuz, the world's most important seaborne passageway for crude oil shipments. Rouhani mentioned the strait in his speech on Sunday, and Iran's Supreme Leader Ayatollah Ali Khamenei on Saturday endorsed the president's threat to shut the chokepoint if U.S. sanctions disrupt Iran's exports.

"Mr Trump! We are the people of dignity and guarantor of security of the waterway of the region throughout the history. Don't play with the lion's tail; you will regret it," Rouhani said.

Source: CNBC

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