US-Iran War Eases Oil Price Pressure

Oil prices have cooled down despite the ongoing US-Iran war, thanks to tankers successfully transporting crude out of the Gulf through alternative routes.

According to early shipping data, 39 commodity ships passed through Bab el-Mandeb into the Red Sea on Tuesday, the highest since July 19th. In contrast, only a few transited the Strait of Hormuz, which has been largely blocked since the war began in February.

This shift is significant because Hormuz used to handle about a fifth of global oil and gas flows. However, as IG analyst Tony Sycamore noted, repeated workarounds can reduce the market's expectation of a prolonged supply crunch.

While this may seem like a reprieve for markets, it's essential to note that the risk doesn't vanish entirely. Higher freight rates, insurance costs, and longer delivery times are still potential consequences of rerouting through the Bab el-Mandeb, Red Sea corridor.