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The Energy and Economic Effects of a Nuclear Iran

Tehran crossing the nuclear threshold is unlikely to cause an immediate disruption in the flow of oil. It would, however, significantly alter the geopolitical and strategic landscape of the Middle East, raising the likelihood of instability, terrorism, or conflict that could interrupt the region’s oil exports. If any such disruption did occur, it would have a significant effect on the supply and price of oil.

Middle East oil is critical to the global economy. Exports from the region?more than half of which come from Saudi Arabia?fulfill nearly 20 percent of global daily oil demand, and 35 percent of all seaborne-traded oil passes through the Strait of Hormuz. The Persian Gulf?Saudi Arabia in particular?also is home to nearly all the world’s spare production capacity; if oil production or exports from the region are interrupted, the rest of the world would have an extremely difficult time replacing those supplies.

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Economic Costs of a Nuclear Iran

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