Iran’s leaders are talking tough about shutting down the straits of Hormuz. This may be a way for them to get the West to negotiate from a weaker position regarding Iran’s nuclear fuel program. Or it may be that Iran thinks there is an attack coming.

The question is this: Will oil prices skyrocket if Iran blocks the Straits? And this: For how long?

If the rhetoric doesn’t calm down, it may not be long before the price of oil moves into the $110- to $125-a-barrel range, energy analysts say. But any movement beyond that will depend on what happens: Does Iran actually try to thwart ships that want to use the strait to transport oil? How would the US Navy or other naval powers react to that?

Oil is highly volatile. In times of excess production or recession it falls sharply. In 2008, it fell from $145 to under $40. But in tight markets, it shoots upward.

At issue is a significant amount of the world’s oil that moves by sea. In 2011, about 17 million barrels of oil per day, or about 35 percent of the world’s seaborne traded oil, moved through the Strait of Hormuz, the US Energy Information Administrationestimates. Much of this oil flows to Asia – Japan, China, India, and other emerging economies. But some of the oil flows to Europe, and a relatively small amount – some 1.1 million barrels per day – goes to the United States.

If the Straits are closed for more than a few weeks, worldwide reecession is guaranteed. That’s my view, and I’m sticking to it.

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