Summary
Oil prices have significantly risen following the US-Israel war on Iran and the effective blockade of the Strait of Hormuz. The conflict has caused a large disruption in global oil supply, leading to higher prices and a noticeable difference between spot prices and futures prices.
Key Facts
- Oil prices jumped after the US and Israel began military action against Iran.
- President Donald Trump announced a naval blockade on Iran, pushing prices over $103 a barrel.
- The physical market and futures market for oil have shown different pricing trends.
- Dated Brent is the benchmark for spot prices, while Brent futures reflect longer-term expectations.
- Iran’s blockade of the Strait of Hormuz has severely disrupted oil supply, with a daily shortfall of about 8 million barrels.
- The gap between spot and futures oil prices has widened since the conflict started.
- The Strait of Hormuz normally handles about one-fifth of global oil shipments.
- Alternative routes have been increased by countries like Saudi Arabia, but challenges remain.
