Middle East Tensions Send Oil Prices Soaring

Crude oil prices have surged due to escalating tensions in the Middle East. Attacks on US and Iranian forces in the Persian Gulf region led to a significant increase in Brent oil prices, reaching above $91 per barrel, while WTI rose to around $86 per barrel.

The Strait of Hormuz, through which 20 million barrels per day flowed before the conflict, has seen levels as low as 6-8 million barrels per day. The current situation may see this number halved again.

Backwardation on the forward curve, where contracts for immediate delivery are priced higher than those for later dates, indicates market concerns about an immediate shortage rather than long-term resource depletion.