Crude oil futures are up by 4% on the day as the Israel-Iran conflict shows no signs of a ceasefire. The Middle East is a major hub for oil production, with Iran having significant influence over the Strait of Hormuz, an important oil passageway involved in the transportation of roughly 20% of global oil shipments. In addition, Israel has targeted oil infrastructure locations within Iran.
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According to Axios, President Trump is also considering launching strikes on Iran’s nuclear facilities.
These factors could lead to oil supply chain disruptions and higher prices as crude oil futures approach their highest level since January.
Some Shipowners Avoid Strait of Hormuz
While the Strait remains open, some shipping companies have chosen to avoid it anyway in order to steer clear of the conflict. “Circumstances and risk tolerance vary widely across shipowners,” told Bimco Head of Security Jakob Larsen to CNBC. “It appears that most shipowners currently choose to proceed, while some seem to stay away.”
Avoiding the Strait could result in increased transportation costs and shipment delays, increasing the price of shipped goods, like oil, in the process.
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