Strait of Hormuz Disruptions Send Oil Prices Soaring
US stocks took a hit as tensions between Washington and Tehran escalated, with oil prices rising on concerns over supply disruptions.
The Strait of Hormuz, a key chokepoint for global oil flows, is back in the spotlight after a ceasefire expired, causing shipping traffic to slow and vessels to be attacked. As a result, West Texas Intermediate (WTI) crude rose 1.3% to $83.44 a barrel, while Brent gained 1.4% to $89.77.
The Strait's importance lies in its role as a transit route for oil tankers, and traders are repricing crude based on 'transit risk' rather than supply-and-demand data. This can lead to knock-on effects across other assets, including gold, which tends to rise when geopolitical risk increases.
Airlines were among the hardest hit, with JetBlue falling 6.4% after analyst firm Seaport Research Partners warned that the strait's disruption could put its balance sheet at risk if jet fuel prices continue to fluctuate.