Oil Slams, But the "Shadow of Hormuz" Still Causes Nervousness
Oil prices fell on Friday (January 30th) after a three-day rally, as risk-off sentiment swept the market: Asian stocks weakened and the dollar strengthened, making dollar-denominated commodities less attractive.
In Asian trading, Brent fell back below $70/barrel and WTI weakened to around $64/barrel, after breaking through $70 the previous day for the first time since mid-2025.
Despite the correction, the market hasn't completely calmed down as Trump's focus on Iran continues to increase risk premiums. Citi estimates Brent's risk premium remains around $7–$10 per barrel—meaning prices are still "peppered" by geopolitical tensions.
The biggest concern is the Strait of Hormuz, a narrow waterway crucial for global energy shipments. If tensions escalate and this waterway is disrupted, the market immediately calculates the potential for supply disruptions and fuels price increases.
Adding to the tensions, Iran (the IRGC) held live-fire military exercises in Hormuz on February 1-2, which automatically put market participants on high alert ahead of the weekend.
On the supply side, attention is also focused on the OPEC+ meeting on Sunday (February 1) to review supply policy for March. Market expectations: OPEC+ is likely to maintain its current policy pause.
Essentially, oil has indeed "put on the brakes" after a rapid rally, but the market is still struggling to relax: as long as the Iran-Hormuz issue and the OPEC+ decision remain unannounced, prices are vulnerable to sharp fluctuations based solely on headlines—up or down in a matter of hours. (asd)
Source: Newsmaker.id
