US-Iran Conflict Rattles Markets
The US-Iran conflict, now in its 11th day, has disrupted 20% of global oil supply reported. IEA plans to release 400M barrels from reserves to curb volatility announced.
The Strait of Hormuz, a critical chokepoint for oil tankers, remains heavily contested, raising insurance rates for vessels. Lloyd's of London has already raised its war risk insurance premiums for the region by 0.5%, adding roughly $100,000 to the cost of a supertanker's voyage. Saudi Arabia's oil production has been reduced by 4.5 million barrels per day due to the conflict, exacerbating supply concerns. Aramco's facilities are reportedly under increased security following drone strikes over the weekend. Several US shale producers are considering increasing output, but logistical bottlenecks and labor shortages could limit their ability to respond quickly. Transportation costs from the Permian Basin to Gulf Coast refineries have already risen 15%.
