Energy Commodities Reach Record Highs Amid Middle Eastern Tensions

Crude oil prices have rallied this week, pushing energy commodities to record highs. Brent crude has risen over 8%, while WTI and diesel are up around 7%.

The rally is driven by renewed fighting between the US and Iran, which has increased concerns about disruptions to Middle Eastern supply. While oil flows through the Strait of Hormuz, volumes remain constrained due to the ongoing conflict.

Refined products have seen even more spectacular returns, with European gasoil futures up 123% in price terms and around 185% on a total-return basis.

The strength of refined products highlights the importance of considering factors beyond crude oil supply, such as refinery capacity, product inventories, and trade flows.