Oil: Geopolitical premium persists as Gulf conflict escalates – BNY

BNY’s Geoff Yu notes that the U.S.–Iran confrontation and Houthi threats in the Red Sea are sustaining a geopolitical premium in Brent and WTI. Brent has risen toward $88 per barrel, with risks that Strait of Hormuz disruptions further tighten Oil supply. Higher Energy prices are described as both a risk-off signal and an inflation shock for global markets.

Gulf tensions keep crude supported

"The U.S.–Iran conflict intensified for a tenth straight day while mediators tried to restore a fragile truce, with the Houthis in Yemen threatening a new maritime front in the Red Sea. The U.S. Central Command said it hit command centers, launch sites and air defenses in Iran, while Iran struck U.S. military sites in Kuwait and Jordan. The U.K. navy reports also pointed to attacks on vessels near the Strait of Hormuz."

"The standoff has lifted Brent crude to $88.45 a barrel and pushed U.S. gasoline above $4 per gallon. Disruptions to Hormuz shipping could further tighten global oil supplies and raise geopolitical risk."

"In the Gulf, a tenth day of strikes keeps the shipping-risk channel alive and leaves oil trading with a geopolitical premium. Gold has edged higher, but higher oil is not just a risk-off signal; it’s also an inflation shock. That is why Treasurys haven’t behaved like a simple safe haven."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)