US-Iran Tensions Send Oil Prices Soaring
Oil prices surged in early trading after a series of US-Iran strikes raised concerns about potential disruptions to Middle East supply routes, particularly through the Strait of Hormuz. The strategic waterway accounts for nearly one-fifth of global oil consumption.
The Brent crude benchmark rose 0.8% to $95.40 a barrel and the US WTI gained 0.5% to $90.66. Even if some oil flows continue, the threat of delays can significantly increase costs across the supply chain due to higher shipping risks and insurance premiums.
The market is charging for the risk that barrels won't arrive on time, reflecting a shipping risk premium rather than just tight supply. This typically pushes up near-dated futures more than long-dated ones, widening the price gap between now and later delivery.