Oil Above $100 Again: Hormuz Risks vs. Steady Flows
Oil swung around above $100 a barrel on Oct. 7. It rose in early Asian trade on Middle East tensions around possible supply disruption, then fell in choppy trading as traders weighed a pickup in Iranian attacks on vessels in the Strait of Hormuz against flows that stayed resilient. Wall Street Journal Bloomberg
The prior day printed steady. Oil held flat on Oct. 6 as traders weighed rising exports from the Middle East against elevated risk to tankers traversing the Strait of Hormuz. Bloomberg Physical barrels kept moving. Risk stayed in the price.
The prior two weeks showed the same push and pull. Oil rose back over $100 on Sept. 30 as investors weighed a potential return to active conflict between the United States and Iran. Bloomberg Earlier in September the price had jumped to $105 a barrel amid signs the Middle East conflict would not be resolved quickly. BBC
Force posture added to buying. The United States planned to add a third aircraft carrier and up to 10,000 troops in the Middle East, according to Oct. 1 reporting. Reuters The plan was reported as a plan, not a completed deployment. Traders treated it as tail risk, a low-chance but high-impact shock, not an immediate supply cut.
The August tape showed headline spikes without a sustained loss of flow. Brent crude futures, the global benchmark, climbed to roughly $91 a barrel after Iranian media said an oil tanker had been seized in the Strait of Hormuz. Wall Street Journal Oil prices rose in Asian trade amid growing doubts that the Strait of Hormuz can reopen soon, then edged higher in early Asian trade amid lingering tensions. The spring baseline was lower. Front-month WTI crude futures, the U.S. price for the nearest delivery month, rose 2.1% and front-month Brent gained 2.3% amid rising Hormuz tensions in late April.
The broader context here is a market pricing two books at once. One book tracks what can be seen: loadings, tanker movements and export levels out of the Middle East, which have so far absorbed the headlines. The other prices interruption risk in the front month, where geopolitical headlines land fastest. When those books diverge, intraday reversals become the norm. For savers and borrowers, that tension is what can pass through to petrol, freight and inflation.
What this sequence from roughly $91 in August to $105 in September and back over $100 in early October means for pricing is a durable risk premium, an extra charge for uncertainty, rather than a one-off spike. Front-month contracts are doing the work. That structure puts the weight on freight, war-risk insurance and timing of loadings, and it punishes extrapolation from any single headline about seizures, attacks or carrier movements.
In my view, the signal to separate from the noise is flow persistence. Attacks on vessels raise the cost and complexity of transit. Rising exports have offset it. Until one side breaks, volatility itself is the price discovery mechanism. Skepticism is warranted toward any clean narrative that Hormuz is either fully open or fully closed. The verified pattern is repricing around incomplete information, session by session.
