Oil prices rose for a third day after US President Donald Trump warned Iran to reach a nuclear deal or face military action. This statement re-escalated tensions in the Middle East and rekindled market concerns about potential unrest that could disrupt supply.
West Texas Intermediate (WTI) crude oil rose to near $64 per barrel after rising 1.3% in the previous session and closing at its highest level since late September. In a social media post on Wednesday, Trump said the US ships he ordered to the region were ready to carry out their mission "with speed and force, if necessary."
This latest threat injected a risk premium into oil prices although the market is also facing pressure from escalating supply issues. This means that global supply fundamentals remain the brakes, but geopolitical headlines are adding fuel to price movements.
Market fears are most evident in the options market. Traders are paying higher premiums for bullish calls with the longest maturity in approximately 14 months, as protection in case the US - Iran conflict worsens. In recent years, the options market has often been a "fast track" for betting on Middle East geopolitical risks.
The primary risk is clear: if the conflict escalates, oil flows from the Middle East could be disrupted. This region accounts for about a third of global supply. Iran's retaliation could also spill over into the Strait of Hormuz, a narrow waterway that serves as the lifeline for global oil and LNG shipments where tankers carry energy cargoes to various countries.
5 Conclusions
Oil rose for three days as Trump's threats to Iran fueled geopolitical concerns.
WTI approached $64/barrel, helped by an earlier 1.3% rally and its highest close since late September.
The risk premium has re-entered prices even as global supply issues remain pressing from a fundamental perspective.
The options market is showing caution: bullish options are becoming more expensive as protection against conflict.
The biggest risks lie in Middle East supply disruptions and potential problems in the Strait of Hormuz (a vital oil and LNG route). (az)[sma]
Source : Newsmaker.id
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