The oil market is finally pricing in a prolonged Hormuz crisis, with flows through the strait down to roughly 11% of pre-war levels. Diesel and other refined fuels face an increasingly severe squeeze, pushing crack spreads and consumer prices sharply higher.
The IEA expects global oil supply to fall 4.3 million bpd this year, potentially deepening the energy crunch as the conflict drags on.
For most of the past six months, traders active on the commodity futures markets have been mostly optimistic. They have taken every statement by President Donald Trump about peace talks or victory over Iran at face value, betting on a speedy end of the war. Now, it has started to dawn on many that this is not happening.
