Emotions, more than economics, may now determine oil prices

 As risk turns into a commodity, it escalates the arrival of the next energy shock.

From Samirul Ariff Othman

For much of the past decade, the global energy market has demonstrated remarkable resilience despite repeated geopolitical crises. Yet resilience should not be mistaken for invulnerability.

The renewed escalation of tensions involving Iran, together with continuing disruptions to Russian energy infrastructure, suggests that the global oil market may be entering a far more fragile phase than many investors currently appreciate.

The issue is no longer whether geopolitical tensions exist — they have become a permanent feature of the international landscape — but whether the global energy system still possesses sufficient buffers to absorb another major shock.

The Strait of Hormuz remains the world’s most strategically important maritime energy corridor, through which roughly one-fifth of globally traded crude oil and a substantial proportion of liquefied natural gas exports pass. Any disruption, whether actual or merely anticipated, immediately reverberates across global markets. - FMT