Hormuz closure can push global economies into recession

An international economic institute says possible closure of the Strait of Hormuz by Iran in response to the Western sanctions will slow down the world economic growth and increase the oil prices. According to Press TV, three reports published by the Standard & Poor's warn about the likelihood of severe disruption of oil supplied via the Strait, through which 20 percent of the world’s oil flows, stressing that the act may boost oil prices to USD 150 a barrel and push global economies into a recession. The reports discussed the impact of tensions in the Persian Gulf on the economy of the Middle Eastern states, the risks that closure of Hormuz would pose for companies looking for credit, and the threats to global economic growth rate due to an oil shock. The institute added “Iranian authorities can disrupt supplies of oil from the Persian Gulf by imposing tanker inspections or boarding merchant ships in their territorial waters.” The reports stated that in case of such disruption, oil prices will increase “because markets would increasingly view armed conflict as a real, if remote, possibility.”