The conflict surrounding Iran and the Strait of Hormuz poses a threat to a significant share of the global oil supply. Consequently, oil prices are rising sharply.
One-fifth of the world's oil is transported through the Strait of Hormuz; therefore, if any disruption were to occur there, traders and buyers worldwide would be the first to become anxious.
In mid-March, the price of Brent crude oil surpassed $100, rising by over 40 percent during the recent surge.
Supply losses will be further exacerbated if attacks occur on tankers, export terminals, and regional fuel facilities.
The IEA announced a record-level release from emergency stockpiles to calm markets, but traders remain skeptical that this can offset a long-term disruption.
Some analysts say that if the Strait of Hormuz is blocked, prices could rise significantly; however, reserve releases could mitigate these extremes.
At the same time, due to rising fuel costs and slowing economies, the increase in crude oil prices continues to dampen demand forecasts.
That weakness in demand could eventually cool down prices; therefore, some expect oil prices to decline later this year.
Consumers are suffering due to petrol, diesel, shipping, aviation, inflation concerns, and increasing pressure on central banks worldwide.
What exactly is happening on Earth? Oil is behaving not like an ordinary commodity, but like an asset under the threat of war—isn't that true?