Geopolitical Tensions Boost Oil, Focus on Strait of Hormuz
Oil prices surged again on Thursday (January 29th) after US President Donald Trump issued an ultimatum to Iran: reach a nuclear deal or prepare for a military attack. The market immediately placed a "risk premium" on the scenario of conflict in the Middle East that could disrupt supplies—from Iranian exports to major global shipping lanes.
In the latest update, Brent was trading at around US$69.34/barrel, while WTI was hovering around US$65.55/barrel. This follows a rally in recent days that had lifted Brent above US$70 for the first time since mid-last year.
Adding to market tensions were reports of planned live-fire drills near the Strait of Hormuz—a narrow passage through which approximately one-fifth of global oil flows pass. If this passage is disrupted, the effects could quickly spread to global energy prices, not just regionally.
Interestingly, this oil rally occurred while the market was still haunted by the issue of oversupply in 2026. However, geopolitical sentiment (Iran, Venezuela) plus production disruptions (e.g., from Kazakhstan) kept the "surplus" narrative in check—at least until the direction of the conflict became clearer.
In the derivatives market, the signal was also clear: bullish (call) options became significantly more expensive than bearish (put) options for the longest period in over a year. This means market players are increasingly paying "insurance" to anticipate a surge if the situation in Iran escalates.
Even so, oil movements remain sensitive to the dollar and risk sentiment. Once the dollar strengthens or the market weakens, oil can easily "slip" from its peak—so volatility is likely to remain high in the near term.
Source: Newsmaker.id
