Iran could bring an ‘overnight economic depression’ in retaliation to US – ex-Pentagon official tells Boom Bust

5 Jan, 2020 15:05

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An Anti US mural on the former US embassy's wall in Tehran, January 03, 2020 © Reuters / Nazanin Tabatabaee

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Tehran could block a key shipping route in the Gulf region after US attack, thus causing a terrible headache to global oil markets and the world’s economy in general, former Pentagon official Michael Maloof told RT’s Boom Bust.

Crude prices rose on Friday – with both Brent and West Texas intermediate (WTI) gaining more than three percent – on the news of the US drone strike that killed Qassem Soleimani, the most powerful Iranian general and the commander of the Revolutionary Guards’ elite Quds Force. However, that could be only the beginning of the economic consequences of the attack, according to Maloof.

“If the Iranians take retaliatory actions of some kind, let’s say in the Persian Gulf or the Strait of Hormuz, basically blocking through mining or sinking ships...it will bring virtually overnight economic depression because 40 percent of the oil comes through there for other countries,” he said.

While the US could feel less impact in this case as it produces its own crude, China could be one of those countries “dramatically” hit by such a scenario, Maloof believes. However, Iran may also target oil refineries in Gulf countries, which house US personnel, to hit the Americans indirectly, the former Pentagon official added.

“The Iranians could do things without directly confronting the US, but attack the economic basis for the world. It they can’t survive economically no one else is going to,” Maloof warned.