The CEO of Italian energy company Eni said on Wednesday oil markets are signalling that an escalation between Israel and Iran and the closure of the Strait of Hormuz is unlikely.

About a fifth of the world’s total oil consumption passes through the Strait, which lies between Oman and Iran and links the Gulf north of it with the Gulf of Oman to the south and the Arabian Sea beyond.

“The markets have not pushed the value of crude oil above $80, $90 a barrel (signalling that) they are predicting that more extreme situations, including the closure of the Strait of Hormuz, are unlikely,” Eni’s Claudio Descalzi said on the sidelines of an energy conference.

Israel launched strikes against Iran on June 13, saying it targeted nuclear facilities, ballistic missile factories and military commanders during the start of an operation to prevent Tehran from building an atomic weapon.

Iran, which has denied such intentions, has in the past threatened to close the Strait of Hormuz for traffic in retaliation against Western pressure.

Descalzi said that a potential closure of the Strait would first affect Iran’s oil sales and would probably involve U.S. intervention.

“All things that, even though we are in an extreme volatile situation, I think that the world’s leaders will try very hard to avoid,” Descalzi said.

Oil prices were steady on Wednesday, after a gain of 4% in the previous session, with Brent crude futures hovering around $76.6 per barrel at 1225 GMT.

Eni CEO said the state-controlled group had been working for years to reduce its exposure to oil by developing new businesses including renewable and biofuel ventures.

The group is likely to generate 2 billion euros ($2.3 billion) from a planned sale of a 20% stake in its renewable unit Plenitude by the end of this year, Descalzi told reporters.

Eni said in May it had entered exclusive talks with investment firm Ares Alternative Credit Management on the disposal of the 20% Plenitude stake.
Source: Reuters