Oil prices surged almost 8% last week posting new 2026 highs, yet equity markets took the move in its stride. The rally was driven primarily by escalating attacks on shipping around the Strait of Hormuz, where cargo flows showed signs of slowing after recovering towards pre-war levels earlier in the month. Freight costs soared, with Goldman Sachs estimating average global crude freight rates had reached US$30/bbl, up from just US$4/bbl a year earlier, while Middle Eastern routes reached US$35/bbl. Houthi attacks on Saudi Arabia and strikes near Riyadh added to concerns about regional export capacity. These supply risks more than offset OPEC’s downgrade to its 2026 oil demand growth forecasts.
The International Energy Agency’s existing emergency stock-release plan was also viewed by some US officials as insufficient, prompting calls for an additional release of at least 100 million barrels. President Trump’s decision on Friday to waive new Russian energy sanctions was an attempt to ease pressure on fuel prices, but it did little to offset the immediate supply risks around Hormuz and refinery disruptions.
- The trend and momentum is up, traders should be long or out, although it feels one announcement away from a 10-20% drop
