US-Iran Tensions Send Oil Prices Soaring

Oil prices have surged due to ongoing tensions in the Strait of Hormuz, with Brent crude nearing $87 per barrel. The US has suggested it may maintain an open-ended blockade on Iran, causing concerns about supply disruptions.

The threat of a prolonged blockade has led traders to reassess their risk assessment, shifting from treating the disruption as temporary to pricing it as an ongoing concern. This shift is reflected in near-dated oil contracts, where prices remain higher than later deliveries due to increased shipping risks.

Despite this, fundamentals such as softer demand forecasts and rising inventories argue for calmer prices further out. Analysts warn that the reduced odds of a quick return to normal tanker flows through Hormuz may exacerbate supply risks.