NewsHK
Supply risk is the oldest variable in energy pricing, and it has been running hot.
West Texas Intermediate crude fell approximately 6% as discussions between Iran and Oman progressed and shipping flows through the Strait of Hormuz recovered, easing the near-term disruption concerns that had been supporting prices.
The Strait of Hormuz is the narrow passage at the southern end of the Persian Gulf and a primary conduit for seaborne crude.
For the broader cycle, any recovery in flow through that corridor shifts the cross-border supply picture almost immediately, and this week the improvement in shipping gave the market a basis to compress the disruption premium it had built in.
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