Iran-US Conflict Sends Oil Prices Soaring Amid Prolonged Volatility

The ongoing conflict between the US and Iran is expected to have a prolonged impact on the global oil market, with prices likely to remain high for years. At this year's Asia Pacific Petroleum Conference (APPEC), attendees expressed concerns about the escalating tensions in the Middle East, which has led to higher insurance and freight rates. Reuters' Clyde Russell reported that the mood at APPEC was gloomy, with many delegates predicting a difficult resolution.

According to Bloomberg, Russia's ESPO blend has surged by $20 per barrel compared to Brent crude, due to Chinese independent refiners running out of alternative options. Tanker rates have also hit an all-time high as traders and tanker operators take on inefficient and more expensive trade routes to avoid the Middle East.

Traders are now paying more attention to physical prices than futures market charts, which has led to a focus on discounts offered by Persian Gulf producers. The premium for blends sold outside the Gulf region is also being closely watched. Industry executives at APPEC warned that a prolonged war in the Strait of Hormuz would exacerbate the fuel crunch and make matters worse.