Iran Conflict Chokes Off Fragile Oil Market Recovery

The Iran conflict has thrown another curveball at the oil market, disrupting global energy flows and choking off a fragile recovery. The latest escalation in the Red Sea comes as Saudi Arabia's west coast has become its primary outlet for crude exports after the closure of the Strait of Hormuz.

Roughly four-fifths of Saudi crude shipments to Asia transit through Bab el-Mandeb, but with the Houthi blockade, many vessels are now avoiding this route. Instead, they're crossing the Suez Canal into the Mediterranean and then circumnavigating Africa, adding at least four weeks to their journey.

This logistical nightmare is hitting the global refining sector hard. Asian refining output plummeted during the crisis, but had only recently begun recovering. With renewed supply disruptions and soaring oil prices above $90 a barrel, China's refiners are likely to stall any nascent recovery.