Why the Middle East war still convulses the oil market

The ongoing conflict in the Middle East continues to exert a significant influence on global oil markets, causing price fluctuations even after more than five months of hostilities. Developments, including evolving statements from leaders, have kept markets on edge.

While the potential disruption of the Strait of Hormuz has long been recognized as a risk factor, Iran's demonstrated ability to impede traffic through the crucial waterway has caught oil markets off guard. Jim Burkhard, head of global energy crude oil research at S&P Global, noted that "surprises" are what truly shake the market, and the "Hormuz closure was a shock."

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What really shakes the market are surprises… and the Hormuz closure was a shock.

Brent crude oil prices experienced a sharp increase of over 13 percent immediately following what the article describes as a "US-Israeli siege against Iran" on February 28. Since then, prices have swung in both directions as the conflict has persisted. Bob McNally, president of the Rapidian Energy Group and a former White House official, highlighted the "complete unexpectedness" and "unfamiliarity" of the current situation as key drivers of market volatility.

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Number one, it’s the complete unexpectedness, unfamiliarity with what we are seeing.