Oil Market Dynamics - The market had priced in a $15-20 per barrel premium due to Israel-Iran tensions, which is now being eliminated as the worst of the turmoil appears to be over [2] - Prior to the conflict, debates centered on tariffs potentially driving recession and leading to $50 oil price predictions [3] - Better-than-expected oil demand data and underperforming OPEC production quotas were observed [4] - Shale oil drilling had decreased, leading to questions about potential rollover [4] - Demand is hanging in at around 1 million barrels per day of growth [6] Factors Influencing Oil Prices - Transportation costs, particularly shipping, have surged due to Middle East risk premiums [5] - The potential for shale oil growth resumption if oil prices remain above $70 is a key variable [6] - Underlying oil fundamentals should be the primary focus, considering past disruptions' varied impacts [6][7] Geopolitical Considerations - The Israel-Iran conflict has not demonstrated Iran's strong military capabilities [8] - Most of Iran's oil sales go to China, making the closure of the Strait of Hormuz unlikely [8][9] - China's role is significant in preventing actions like closing the Strait of Hormuz [9]

Geopolitical Risk & Energy Prices - Rising tensions due to Israel targeting Iran's missile production sites are causing concerns about shipping disruptions in the Persian Gulf and Strait of Hormuz, leading to increased oil and natural gas prices [1] - Even if shipping lanes remain open, energy prices may still rise due to increased shipping costs related to perceived risk and risk premiums [2] - Shipping costs from the Middle East Gulf to China for super tankers have increased from $140 per barrel of oil moved [5] - News flow, especially aggressive rhetoric from the US, significantly impacts shipping costs [7] - GPS signal jamming in the Strait of Hormuz poses a risk to smooth transport [8][9] Shipping Market Dynamics - Ship owners are considering the possibility of ships being locked up, demanding a premium reflecting risk [4] - The market has caps on how much it will pay for shipping [6] - A two-week pause initiated by the US government for negotiation has eased the temperature, reflected in oil markets [7] - Heightened risk levels persist in the Gulf and Strait of Hormuz, hindering smooth transport [8] - Potential incidents like mines or kinetic events could significantly increase shipping costs [10][12] Insurance & War Risk - Insurance premiums haven't significantly increased as the region isn't declared an active war zone by the Joint War Committee, but this could change with incidents like mines [12][13]