Middle East Conflict Continues to Shake Oil Markets

The ongoing conflict in the Middle East continues to impact oil markets, causing prices to surge and tumble over recent developments. The potential vulnerability of the Strait of Hormuz has long been a concern for oil markets, but Iran's ability to largely close the waterway has caught many off guard.

According to Jim Burkhard, head of global energy crude oil research at S&P Global, 'what really shakes the market are surprises.' The closure of the Strait was a shock to oil markets, leading to Brent oil prices surging over 13% in the immediate aftermath. Since then, prices have been jolted in both directions as the conflict has dragged on.

The supply shock caused by the closure of the Strait is 'the biggest disruption in history,' according to Bob McNally, president of the Rapidian Energy Group and former White House energy advisor to George W. Bush. The waterway handles about 20 million barrels per day of crude, roughly a quarter of global oil demand.