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Soon after the Trump administration launched its war on Iran, I called up Reed Blakemore, director of research and programs at the Atlantic Council Global Energy Center, to talk about the consequences. While oil and gas prices were already on the rise, there was still more hope then that the impact of the conflict might be short-lived. At the end of our conversation, Blakemore said plainly: “Let’s have a call again [next week] … We’ll have a much clearer picture of what the conflict is going to look like and what the story really is going to be for energy moving forward.”
Energy infrastructure has become a key leverage point in the unfolding war
I talked to Blakemore again today about what Iran’s continued chokehold on the Strait of Hormuz means for energy costs and US tech companies’ rush to build out energy-hungry AI data centers.
This interview has been edited for length and clarity.
What’s your outlook now on how the conflict is likely to affect oil and gasoline prices?
Reed Blakemore: The fundamental issue right now, in terms of the energy implications of the conflict, is how the market is reacting to the uncertainty around safe passage through the Strait of Hormuz.
At the outset of the conflict when we saw insurance premiums going up for these ships, we were largely talking about it in the context of, Hey, it’s just gotten much more expensive for a ship to traverse the Gulf and therefore they’re staying out.
We’ve moved from that to actual concerns around the security of passing through the straits in the first place, so this is no longer an insurance cost issue as much as it is a safety and security issue.
We have virtually no traffic passing through the Strait of Hormuz. A lot of countries are beginning to shut in production. So there’s already this ripple effect emerging purely because the market and basically tankers are fundamentally concerned about whether or not they will be able to safely pass through the strait.
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