The oil market’s sensitivity has increased with the escalating unrest in Iran and the rising level of American threats, prompting prices to move quickly upwards.
Brent crude prices have seen a noticeable increase, exceeding 4% in just two sessions, while hedging premiums against rising prices have reached their highest levels since the confrontations between Israel and Iran during the summer. In contrast to Venezuela, which quickly turned into a pressure factor after talk of increasing its production by millions of barrels, Iran is a much larger producer and exporter, and any disruption to its production will have a deeper impact on global supplies.
Signs of danger were clearly evident in the options market, where a strong skew in favor of bullish call options appeared, with intensive trading of contracts at the “$80” level as a precautionary measure against any sudden rise in prices. At the same time, analysts warned that the market is vulnerable due to some traders holding large bets on falling prices, which could lead to a faster “reversal” if risks escalate.
Iran currently produces more than “3 million barrels per day,” and its exports are estimated at about “2 million barrels per day” (most of which goes to China). With internet restrictions and the expansion of protests, concerns about the Strait of Hormuz are resurfacing, despite the lack of actual disruptions so far. (Asharq)
