Iran's Parliament Speaker Mohammad Bagher Ghalibaf fired a warning shot at the US using a mathematical formula, predicting a catastrophic oil price surge if the Strait of Hormuz is blockaded.
Ghalibaf, a PhD holder in Political Geography, used the equation ΔO_BSOH > 0 ⇒ f(f(O)) > f(O) to illustrate the devastating impact of a blockade on global oil markets.
The formula, broken down by economist Javed Hassan, shows that the immediate effect of a blockade (f(O)) would be a spike in oil prices, but the second-order effect (f(f(O))) would be an even greater price explosion due to shipping companies refusing to send tankers into the war zone or insurance premiums becoming too steep.
Ghalibaf's warning comes after peace talks with the US failed in Islamabad, and President Trump ordered the US Navy to blockade the Strait of Hormuz, a critical waterway for global oil supplies.
The blockade has already thrown global oil supplies off a cliff, with prices soaring as supply is squeezed. Ghalibaf's argument is that a US blockade would trigger consequences for American consumers and the global economy.
