Oil traders are still pricing in calm, even as the Gulf gets tighter: Brent crude dropped 10 percent to $90 a barrel after Iran’s foreign minister said the Strait of Hormuz was “completely open,” then rebounded only 5 percent after Iran reversed course and attacked an Indian tanker.
That swing matters because the market is looking past the most obvious supply shock. Brent is still about $20 below its late-March peak, even though an American blockade on Iranian oil has left even more crude trapped in the Gulf and raised the odds that shipping lanes become the bottleneck, not production.
For refiners and shipping firms, that leaves prices vulnerable to another abrupt lurch if the standoff worsens, while consumers have so far enjoyed some relief from March’s highs. The gap between headline risk and the market’s response suggests traders are betting disruption will stay contained, at least for now.
The next test is whether the Gulf blockade escalates further or eases, because any sign that more barrels are stuck behind the Strait of Hormuz would force a fresh repricing in crude and freight markets.
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