Hormuz War Premium Returns Amid Escalating Tensions
The global oil market is experiencing a shift in sentiment as tensions escalate in the Strait of Hormuz. The Larak strike has added to the supply risk, causing crude oil futures to rise.
Last week saw a decline in crude prices, with some attributing it to the removal of war premium. However, this week's events have put the focus back on the potential disruption to oil supplies.
The Strait of Hormuz has seen limited ship traffic, with only five vessels passing through over the weekend. This is a far cry from the pre-war levels of around 100 ships per day.
Shipping companies are still treating the area as an active war zone, and recent incidents have not alleviated concerns. An inbound tanker took a projectile hit, further highlighting the risks involved.
The US is increasing pressure on Iran with new secondary sanctions, aiming to cut them out of the dollar-based financial system entirely. The conflict has been ongoing for six months, and there's no indication that it will be resolved anytime soon.