Global oil quotes went higher by more than two percent as tensions between United States and Iran created insecurity in the oil transportation route of Strait of Hormuz, where about twenty percent of the world oil is transported.
The rise of oil prices shows the increasing concern of traders about accidents that can happen in the region and if anything happens, the transportation of crude oil might be affected.
The Strait of Hormuz connects Persian Gulf to other markets around the world. It is a necessary passage for major oil exporters such as Saudi Arabia, Iraq, United Arab Emirates, Kuwait and Iran. Normally, if there is any threat to sailing in the strait of Hormuz, oil price on the world market jumps upwards significantly.
According to many analysts, investors follow the events concerning the Middle East closely and fear that after new military operations and/or diplomatic outbreaks in the region, disruption of oil supply, high transportation risks and volatility of oil markets is possible.
The supply chain for oil shipment has not yet been officially disrupted but the new crises around the world have already contributed to prices escalating as markets now weigh up the threat of supply cuts in the future.
With the crisis in the relationship between the USA and Iran continuing, everyone is now waiting anxiously as events take shape in the Strait of Hormuz knowing that what happens in the channel can influence fuel prices and financial markets on the global scale.
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