Oil: Strait of Hormuz risk premium – Commerzbank

FXStreet Insights Team FXStreet

Commerzbank’s energy team notes fading hopes for a US–Iran agreement to reopen the Strait of Hormuz, driving Brent toward USD 90 and gas oil to nearly USD 1,350 per ton. Drone attacks on refineries in Saudi Arabia, Russia, Libya and tight diesel supply add to the risk premium. The analysis underscores that European diesel markets, while not directly hit, face tighter global supply.

Conflict-driven crude and diesel rally

"Hopes for a new agreement between Iran and the US in the near future and for the Strait of Hormuz to be reopened are fading: after Iran set out its conditions for reopening the strait at the weekend – including, amongst other things, demands for reparations – US President Trump responded with a new demand for compensation payments for the victims of the conflict."

"The price of Brent crude rose by 5% as a result and this morning stood at nearly USD 90 per barrel for the first time since the end of July."

"The price of gas oil rose even more sharply: it climbed by almost 10% and is trading at just under USD 1,350 per ton for the first time since the end of April."

"The gasoil crack spread has climbed back above USD 70 per barrel. Reports of refinery outages are exacerbating the situation."

"Even though the European market is not directly affected, this is making the global supply of diesel tighter."

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

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