Energy Market Volatility Rises Amid Middle East Tensions

The global energy market is on high alert as tensions rise in the Middle East. Iranian militants launched a surprise missile attack on US forces in Jordan, causing oil prices to plummet from over $90 to the high $60s and then briefly back over $90. Analysts point out that despite the volatility, investors seem reluctant to price in higher risk due to their expectation of a prolonged stalemate.

JPMorgan analyst Natasha Kaneva suggests that investors may be underestimating the market's ability to absorb risks, but Kalshi traders disagree, pricing in only a 32% chance of $90-plus crude by the end of the year. The Strait of Hormuz remains a crucial negotiation lever for Iran, with Saudi Arabia and the UAE actively working on new pipeline routes that would bypass the strait.

Meanwhile, Russia's energy sector is also under scrutiny as Ukraine continues to pound Russian refineries with drones, further tightening the market for refined products. The Bank of America upgrades Chevron to 'top pick' in integrateds and refining, citing CEO Mike Wirth's aggressive bets on Venezuela and Iraq.