Oil: Geopolitics tighten physical markets – Commerzbank

Commerzbank analysts note that escalating US-Iran tensions and fresh attacks in the Strait of Hormuz are tightening physical oil markets, with record premiums at Cushing pointing to strong demand for immediate supply. Saudi Arabia’s partial pipeline restart has provided only limited relief, while Brent surged to around USD103. Meanwhile, five-year US Treasury yields briefly moved above 5%, highlighting the increasingly close link between oil prices and broader macro-market moves.

War risk and tight supply

"On the energy front, the US-Iran war continued to weigh on markets. Fresh attacks in the Strait of Hormuz were reported during the session, raising pressure on the physical oil markets. Oil traders were reportedly paying record premiums to secure immediate supply at the largest US storage hub in Cushing, Oklahoma, signaling significant tightness in physical markets."

"Saudi Arabia moved to restart flows on a key pipeline, offering some partial offset to supply concerns."

"Brent crude oil prices surged 3.9% to USD103, as fresh attacks in the Strait of Hormuz and physical market tightness offset Saudi Arabia's partial pipeline restoration."

"President Trump said he has encouraged his advisers to support a ban on US diesel exports, citing the wars in Iran and Ukraine as drivers of record diesel prices, though the administration's position on the ban remained in flux during the session."

"Five-year Treasury yields also jumped 17bp and crossed above 5%, the highest in nearly two decades, with their correlation with Brent prices jumping to the most positive level since 1989."

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