The global economy is entering unprecedentedly dangerous times as tensions in the Middle East remain high, according to Daniel Yerginits vice president S&P Global.

Since the start of the Israel-Hamas conflict on October 7 of last year, the oil market experienced little disruption, with prices, however, remaining under pressure as a result of increased US production and weak demand from China. However, that has changed. Its prices of oil were spewed last week on fears that Israel could target Iran’s oil facilities in retaliation for Tehran’s ballistic missile attack, with industry analysts raising concerns about a real supply threat.

“The Israelis haven’t decided what they’re going to do in terms of a strike – that’s up for debateUS President Joe Biden told reporters at a White House press conference last week, adding that he discouraged Israel from striking Iranian oil facilities.

On the brink of the world economy?

Last week, both oil benchmarks posted their biggest weekly gains since March 2023. During trading in Asia on Tuesday, the global benchmark Brent fell 1.77% to $79.50 a barrel, while the US West Texas Intermediate traded 1.83% lower at $75.77 a barrel.

Yergin told CNBC’s “Squawk Box Asia” that he expects Israeli retaliation to not be just a repeat of last April, but something “much stronger.”

It is recalled that in AprilIran and Israel clashed, but ultimately avoided a full-scale war. Iran fired hundreds of ballistic missiles and drones at Israel in retaliation for an attack on an Iranian diplomatic facility in Syria.

When asked if the global economy is on the brink given tensions in the Middle East, Yergin said it’s a precarious time for markets.

“I think it’s a very dangerous moment, the likes of which we haven’t seen before“, he emphasized.

Furthermore, while Yergin argued that it is not certain whether the Iranians have nuclear weapons, it is still “definitely in the background,” particularly in Israeli thinking.

“Bet the Israelis wouldn’t try to attack the nuclear facilities right now. But a few months from now, a few weeks from now, whenever that’s decided, Iran would have the ability — it’s believed — to respond with nuclear weapons, and that raises the stakes.,” he said, likening the moment to the 1962 Cuban missile attack.

“Based on the above statement, Israel is far more concerned about Iran’s nuclear facilities than Iran’s oil industry“, said Pavel Molchanovmanaging director of the investment services company Raymond James. The nuclear program Iran’s production has progressed to a stage where, in about a week, the country could potentially supply enough uranium for five guns fission, according to estimates by Iran Watch, a website run by the Wisconsin Project on Nuclear Arms Control.

Attention focused on the Straits of Hormuz

“The worst case scenario would be something Iran can do on its own, which is to block the Straits of Hormuz. So this is not directly related to Israeli airstrikes or missiles.»

The strait, between Oman and Iran, is one nodal channelwhere about a fifth of the world’s oil production moves daily, according to the US Energy Information Administration. He is one strategically important waterway which connects crude producers in the Middle East to key markets around the world.

The inability of oil to cross the strait, even temporarily, may increase shipping costslead to significant supply delays and raise global energy prices, with some speculating that a worst-case scenario could send oil prices soaring above $100 a barrel.