US-Iran Tensions Drive Oil Prices Higher Amid Supply Concerns
Oil prices have risen by approximately 4% this week due to escalating tensions between the US and Iran, which threaten global crude supply. The Strait of Hormuz remains a key concern for markets, with vessel movements through the strategic waterway still below pre-conflict levels. This has limited the flow of crude and petroleum products through one of the world's most important energy corridors.
The US has signaled plans to maintain its naval blockade of Iran and increase economic pressure on Tehran, keeping geopolitical risk elevated despite weaker underlying demand. According to Susan Bell, Senior Vice President for Oil at Rystad Energy, 'Despite the bearish crude stock data, the broader geopolitical backdrop is preventing a sharper price decline.'
The market's focus has shifted from US inventory data and global demand forecasts to potential supply disruptions from the Middle East. The International Energy Agency expects global oil demand to decline by about 1.6 million barrels per day during the current quarter, but projects a supply deficit of about 1.8 million barrels per day due to disruptions.