Iran said it would close shipping lanes in the Strait of Hormuz in retaliation for sanctions from Western adversaries. Iran is one of the largest oil producers in the world and the shipping lane in the Persian Gulf hosts as much as 40 percent of world oil transportation.
Roy Jordan, a research associate at FACTS Global Energy, tells The Daily Telegraph newspaper in London that closing the strait would devastate the weak global economy.
"It would disrupt major proportion of the world's oil and gas at a time when many of the world's economies are very fragile and would not be able to sustain a serious oil spike," he said.
Crude oil prices during the first week of 2012 have risen steadily to more than $100 a barrel and Jordan said Persian Gulf tensions could push that price closer to $150 without a resolution.
Iran, despite numerous threats, has never closed the Strait of Hormuz. Energy analysts at Georgetown University told The Wall Street Journal last week that Iran would wreck its own economy if it decided to shut the gulf shipping lane.