Brent Soars, Market Fears Supply Snag
Oil prices surged again on Monday (March 2nd) after the escalation of the US-Israel conflict against Iran sparked concerns about supply and shipping disruptions, particularly in the strategic Strait of Hormuz. The market immediately entered "risk premium" mode, as any news about shipping security could change price direction in a matter of minutes.
In European trading, Brent was around $79/barrel, up more than 7%, while WTI was around $71/barrel (volatile).
This surge was triggered by fears that tanker traffic through Hormuz would become even more disrupted. Reuters reported shipping disruptions and many vessels opting to hold off or anchor outside the strait, leading the market to assess the risk that supply from the Gulf could tighten if conditions do not return to normal quickly.
Meanwhile, OPEC+ is trying to mitigate the volatility by agreeing to increase production quotas by around 206,000 barrels per day next month. However, market players believe this step won't necessarily immediately "calm" prices if the primary issue isn't production—but rather shipping logistics and route security.
Therefore, traders' primary focus isn't just war headlines, but one question: "When will tankers return to normal?" As long as flows through Hormuz remain sluggish and insurance costs/shipping risks are high, oil prices are likely to remain supported, and volatility could continue.
In conclusion, oil is likely to remain "hot" in the short term. OPEC+ may increase supply on paper, but if ships continue to avoid the route, the market will continue to price in the risk of a supply shortage—and that's what makes it difficult for prices to fall quickly.
Source: Newsmaker.id
