Iran is ratcheting up tensions in the Gulf, with its seizure of a British-flagged tanker, yet oil prices have been relatively unaffected.
With the surge in U.S. production and worries about weak global demand, oil is not the indicator for Middle East conflict it once was. A different pricing dynamic has been evolving with new supply calculations based on the U.S. as the world’s largest producer, and the partnership between No. 2 Russia and No. 3 Saudi Arabia trying to keep control on production levels.
In the past, one of the energy industry’s greatest concerns has been that a Mideast conflict could disrupt oil traffic in the key Strait of Hormuz, a narrow waterway through which about a fifth of the world’s oil moves.
Yet after Iran seized tanker Stena Impero there Friday for alleged marine violations, oil prices moved slightly higher, and without the velocity that might have been seen during other periods of tension. Futures in Brent crude, the international benchmark, were up just 2% Monday morning from the low it hit Friday, just before news of the tanker seizure reached the media. At their peak early Monday, Brent futures were 3% higher since news of the seizure.
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