Energy Market Impact of Geopolitical Events - Rising oil prices will likely lead to increased gasoline prices [2] - The market is assessing whether the current rally in crude oil prices will escalate further [3] - The energy sector and commodities could be viewed as an insurance against geopolitical risks, but the timing of buying this insurance is uncertain [4] - A dramatic escalation is viewed as unlikely, as maintaining energy market flow is in the best interest of developed countries, Israel, and even Iran [5] - The probability of a supply disruption is not currently high, though risks exist [8] Investment Strategies - Investors who previously abandoned the energy sector are now considering their options regarding crude oil [2] - It may be too early to sell or short positions given the uncertainty heading into the weekend [7] - If there is escalation without infrastructure damage, the market may soften next week [6] - It might not be advisable to buy insurance (energy sector investments) ahead of the weekend, pending potential escalation [6] Geopolitical Considerations - The US might intervene to improve the situation [1] - President Trump may use the current situation to pressure Iran to renegotiate the nuclear deal [9] - Iran may consider advancing its nuclear program, weighing its options in the current environment [9][10]

Oil Market Dynamics - Oil prices initially surged, with WTI jumping 14%, but retreated as no actual supply disruptions occurred [2] - Market focus shifts to Iran's response, which is expected to dictate oil's next move [2] - Iran exports approximately 15 million barrels of oil per day, representing about 15% of global supply [3] - A wider conflict could disrupt oil supply in Saudi Arabia or Iraq [3] - Potential blockade of the Strait of Hormuz could impact 20% of global oil flow [3] Natural Gas Market - European natural gas prices increased by 5% [4] - The Strait of Hormuz is the sole export route for Qatar and the UAE [4] - Qatar and the UAE together account for approximately 20% of global LNG supply [4] Risk Assessment - CIBC private wealth indicates a rising probability of a low probability scenario as the situation evolves [4] - Prices cannot sustain current levels unless barrels actually come off the market [2]