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Oil

  • The Strait of Hormuz remains effectively closed – JPMorgan estimates Middle East production shut-ins could expand to over 4 million barrels a day by end of next week as storage fills and bottlenecks persist. The region accounts for roughly one-third of global output
  • Saudi Arabia intercepted drones targeting its 1-million barrel a day Shaybah oil field over the weekend and was forced to halt operations at the Ras Tanura refinery – the country’s biggest – last week. Barrels are being diverted to Red Sea ports but the logistics are strained
  • More than a dozen countries have now been drawn into the conflict. Trump has flagged the US will consider striking targets in Iran not previously on the list, while Iranian President Pezeshkian has vowed not to back down. Iran’s IRGC has pledged loyalty to the new supreme leader – Khamenei’s son – signalling no imminent change in posture. Trump weighed in overnight on Truth Social, calling the oil spike “a very small price to pay” for US and world safety, and predicting prices will fall rapidly “when the destruction of the Iran nuclear threat is over” – markets are not yet sharing that confidence
  • The ripple effects are broadening: China has told its top refiners to suspend diesel and gasoline exports, South Korea is reviewing an oil price cap for the first time in 30 years, US retail gasoline prices are at their highest since August 2024, and UK PM Starmer has raised the prospect of intervening on household energy bills.
  • These factors led to a sharp increase in Oil prices this morning,  shooting up ~25% – which looked like a blow-off style account.
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Oil
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