Oil: Brent Rises to $106, Markets Fear a Lasting Shock

Strait of Hormuz: Military Operations Sustaining the Risk Premium

Diplomatic signals have not been sufficient to eliminate the risk premium on the Strait of Hormuz. The military situation remains active: Iran's Revolutionary Guards have attacked three cargo ships, and the United States has seized a tanker linked to Iranian oil. Donald Trump ordered the U.S. military to fire on Iranian boats laying mines in the strait and announced a tripling of mine-clearing operations.

Meanwhile, Iran has broadcast images showing commandos boarding a cargo ship in the area, according to Reuters, illustrating the escalation of actions on both sides. The partial closure of the strait, following the outbreak of the U.S./Israel conflict with Iran, has disrupted about 20% of global oil and LNG supply.

Since the hostilities began, the market has moved beyond merely assessing supply and demand fundamentals; it now incorporates the risk of a sustained disruption of maritime transport in the Gulf. This war premium, by nature volatile, depends on military announcements, actual maritime traffic, and the progress of negotiations. As long as passage through Hormuz is not normalized, it remains a dominant price factor for crude oil.

Washington's Ambiguity Fuels Volatility in Energy Markets

The lack of visibility on the duration of the conflict is a major uncertainty factor for the markets. While Donald Trump has ruled out using a nuclear weapon against Iran, he has not provided any timeline for a resolution to the crisis. He also acknowledged that Americans would pay more for fuel « for a little while, » without specifying a timeframe.

The issue of exemptions to Iranian oil sanctions adds another layer of opacity. On April 14, Reuters reported that the United States had decided not to renew a 30-day exemption on Iranian oil shipments, while other sources suggest an extension instead. The available information is inconsistent, preventing any firm conclusions on this matter.

This strategic ambiguity maintains high volatility in energy markets. Operators remain reliant on day-to-day announcements without being able to anchor their expectations to an identifiable resolution scenario. The 12% rise in Brent in one week thus reflects more of a risk shock than a gradual adjustment of fundamentals.

Inflation, Interest Rates, and Sector Exposure: The Real Impact of Oil Consistently Above $100

A Brent price above $100 acts like a tax on households and energy-importing businesses. This surge increases the cost of fuels, freight, air transport, chemicals, plastics, and overall industrial costs. If the shock persists, economic agents might revise their inflation expectations upward and lower their expectations for rate cuts. Central banks could remain more restrictive for longer, a scenario that partly explains the decline in gold (around $4,685 an ounce, down approximately 3% weekly) despite a geopolitical context usually favorable for the yellow metal.

The shock creates clear divides between sectors and countries. Hydrocarbon producers and some integrated oil majors may see their revenues increase, while airlines, maritime transport, chemicals, and retail are directly penalized by rising costs. For refiners, the situation is ambiguous: JPMorgan estimates they could theoretically benefit from better refining margins, but high crude premiums are a significant hurdle. Jefferies also identifies several negative factors for the petrochemical segment, including scarcity premiums, rising freight costs, and a LPG production shortfall.

On the country side, net energy importers such as India, Japan, or Europe face pressure on their trade balance and currency. A risk of sector rotation towards energy and defensive stocks, at the expense of fuel-consuming sectors, is identified in the equity markets. In the bond markets, a maintenance or even a rise in yields remains possible if inflation expectations become durably strained.