Oil supply fears return as supply risks continue to build across key export routes

Oil prices are extending their rally as supply risks continue to stack up across several of the most important transport routes. Brent crude is trading in the mid-90 USD, while WTI is near 87 USD, after renewed tension in the Middle East pushed a geopolitical risk premium back into the market. The move reflects not just the conflict around the Strait of Hormuz, but also a wider squeeze on shipping routes and export flows that is keeping crude firmly supported.

Traffic through the Strait of Hormuz and the Bab al-Mandeb has fallen sharply, and that matters because traders are now reacting to actual route disruption rather than just headline risk. Two tankers reversed course in the Red Sea after threats, underlining how quickly shipping behaviour is changing as the security environment deteriorates. That is helping keep the market focused on supply fragility rather than demand conditions.

Beyond the Middle East, the Caspian Pipeline Consortium terminal has become another pressure point. Loadings at the Novorossiysk terminal were disrupted after tanker attacks, adding fresh concern around Kazakhstan’s crude exports and reinforcing the view that the market is now facing multiple supply shocks at once. Even when the physical outage is temporary, the signal to traders is clear: the margin for error in global oil flows is getting thinner.

That keeps inflation expectations sensitive, because higher crude prices can filter quickly into transport and input costs if the rally persists. For now, the market is still being driven mainly by geopolitics rather than demand, but the policy implications are increasingly difficult to ignore as central banks remain focused on the path of inflation.