Oil: Geopolitics drives price risks – Rabobank

Rabobank’s Senior Macro Strategist Stefan Koopman notes that Brent has risen to 115 dollars as the Iran war enters its fifth week, with markets focused on when oil flows through the Strait of Hormuz will resume and at what price Oil shifts from an inflation to a recession story. He highlights heightened risks from potential US military escalation and Houthi attacks that could disrupt Saudi crude shipments via the Red Sea.

Strait of Hormuz and Red Sea risks

"Brent climbed this morning to 115 dollars, up 2 percent from Friday’s close and about 11 dollars above the low reached after Trump extended the talks until April 6."

"Instead, the market is grappling with two major unknowns that feed directly into each other: when oil flows through the Strait will resume in meaningful volumes, and at what price level oil switches from an inflation story to a recession story."

"Of course, seizing Kharg Island would not mean “taking Iran’s oil.” It would simply choke off large parts of Iran’s export capacity, leaving the barrels in Iranian ownership while pushing global prices higher unless those volumes find their way back to the market."

"All the Houthis would need to do is fire at a few passing tankers, and shipping through the Red Sea would come to an immediate halt."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)