War Heats Up, Energy Becomes Target!
Oil prices remain high after a sharp rally earlier, as market participants brace for the risk of further attacks in the Middle East and the threat of a complete closure of the Strait of Hormuz. In recent trading, WTI was hovering around $70–$71 per barrel, while Brent held steady in the $77–$78 area after a strong surge in the previous session.
Market sentiment was further strained after US President Donald Trump declared that Washington would do “whatever it takes” in the conflict, while US officials signaled that the campaign could be escalated. US media reported that Washington was preparing to escalate the attacks within 24 hours, following an assessment that the initial wave had weakened Iran's defenses.
From Iran's side, harsh statements regarding the Strait of Hormuz have added to market anxiety. This waterway handles about a fifth of global oil trade and a significant portion of LNG. The main risk now lies not only in production, but also in shipping logistics: tanker traffic has reportedly “virtually stopped” due to security threats and rising risk costs.
The physical impact on energy infrastructure is also beginning to become apparent. Saudi Aramco reportedly halted partial operations at its Ras Tanura refinery following the drone attack, while Qatar halted LNG production at Ras Laffan (its largest LNG export facility) after the attack, extending the disruption from oil to gas.
This disruption has spread to shipping costs. The cost of transporting crude oil from the Middle East to China has soared to a record high, indicating that the freight market is pricing in the risk of war and route avoidance. This situation has the potential to keep global energy costs high even as spot oil prices fluctuate.
Going forward, the market will be largely determined by two factors: (1) whether tanker flows through Hormuz can begin to normalize, and (2) whether attacks on energy infrastructure become more widespread. If tensions persist, energy costs risk adding to global inflationary pressures—and this could complicate the maneuverability of central banks, including the Fed, amidst already sensitive economic conditions. (asd)
Source: Newsmaker.id
