#oil-prices-surge

#oil-prices-surge

Take that flow out of the system and Brent doesn't move five or ten dollars, it moves structurally higher. A spike toward $120 or beyond becomes realistic very quickly, and that resets inflation expectations globally.

Traders are simultaneously pricing in two contradictory scenarios: continued political de-escalation on one hand, and the possibility of renewed escalation on the other. This fragile balance leaves the market vulnerable to sudden movements, especially given oil prices' high sensitivity to geopolitical developments in the Middle East.

Higher inflation expectations will be meaningless if employers still hold the cards in wage setting and their customers retrench. The US labor market is too weak to support large price spikes, making fears over oil prices spiking inflation overblown.

The market remains highly sensitive to developments in the Middle East, where elevated geopolitical tensions continue to expose energy infrastructure and shipping routes to significant risks. Supply conditions have already tightened, as production in parts of the region has been curtailed due to limited storage capacity and difficulties in exporting crude amid shipping constraints.

It may be too late for Trump to negotiate from a position of strength with Iran. The conflict has raised the risk of a worldwide recession.

The United States - we produce more oil than we can consume. We're a net oil exporter," Wright said. This comment misses some important context. Some metrics show the U.S. as a net exporter, but for crude oil - the material that's refined into gasoline - the U.S. is a net importer.