Business leaders concerned about possible fallout
While officials focus on getting people out of harm’s way, economists are closely watching what typically comes out of the region: oil. The Strait of Hormuz is a key passageway for more than 20 percent of the world’s oil supply. If it were to be shut down, there are major concerns about rising oil prices and how that could impact the auto industry.
DETROIT (FOX 2) – The U.S.-Israeli-led war in Iran is making many business leaders in Metro Detroit nervous about the impact it could have on the economy, especially the automotive sector.
Big picture view:
This comes as the federal government urges Americans to leave the Middle East as quickly as possible amid escalating fallout from the conflict. There are many layers to the situation, and it can be hard to keep up. As you mentioned, the federal government is advising Americans to depart a long list of Middle Eastern nations as instability continues following the start of the military operation over the weekend.
While officials focus on getting people out of harm’s way, economists are closely watching what typically comes out of the region: oil. The Strait of Hormuz is a key passageway for more than 20 percent of the world’s oil supply. If it were to be shut down, there are major concerns about rising oil prices and how that could impact the auto industry.
The reported closure of the strait is part of Iran’s retaliation following the killing of its Supreme Leader. Here’s what auto experts and business analysts are saying:
“Anytime there’s a global conflict, that can impact and disrupt supply chain management,” said business analyst Mark Lee. “Put simply, some of the parts you would normally get from overseas might be delayed.”
“I’ve talked to a number of analysts, and they say it’s way too early to make projections, but obviously the big thing to watch is the price of gasoline,” said automotive reporter Jeff Gilbert. “If there’s a short-term spike, it probably wouldn’t have much impact on car sales. But if something drags on for a long time, like the oil spikes we saw 10 to 15 years ago that lasted for months, that did affect car sales. Nobody really expects that to happen this time, but it’s possible. On the other hand, if it’s a short conflict and sanctions are lifted, leading to more oil coming from Iran, that could actually lower gasoline prices. So the jury is still out.”
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Meanwhile, the U.S. Department of State is urging Americans to leave several Middle Eastern countries due to what it calls “serious safety risks.”
The list includes Bahrain, Egypt, Iran, Iraq, Israel, including the West Bank and Gaza and others.
The conflict has led to widespread airspace and airport closures. Flights have been canceled, and shelter-in-place orders have been issued at U.S. embassies amid continued threats of attacks.
