War has erupted in the Middle East once again, after the US and Israel launched airstrikes on Iran. In response, Iran has launched waves of drone and missile attacks against its neighbors and succeeded in stranding large volumes of oil and gas exports inside the Gulf. Prices have shot up in response. In oil markets, Brent prices have climbed by around $10/B to the mid-$80s, but the real action has been in middle distillates, with jet kerosene prices more than doubling this week.
Typically, when major geopolitical events impact supplies – and there is no doubt that this conflict is now doing that, with Iraq already shutting in significant volumes (MEES, 6 March) – Opec+ would take action to stabilize markets. But this time around the group has few levers to pull as the conflict has in one fell swoop taken its spare capacity off the market. (CONTINUED - 933 WORDS)
