In the world of the geopolitical risk premium the question is half traders priced him the appropriate amount of risk premium? not surprisingly has pulled back after the Iran risk premium run-up we’ve seen lately because no attack happening over the weekend and the has eased the risk, at least for now. Yet oil still has some solid monthly gains in the books with WTI hanging around $66.12 per barrel, down just a smidge (about 0.5-0.6%) from yesterday’s close.
Brent is sitting near $71.03, easing off roughly 0.7-1.0%. It’s a classic risk off relief pullback from those six-month highs we hit last week, but the on the Iran risk premium front we may be just getting started. Still the clock is ticking as last week President Trump says Iran has 10 to 15 days to make a decision as the US has its largest military presence in the region to levels since the 2003 Iraq invasion as the US has deployed 1/3 The US navy’s global fleet.
So, what is the correct number for the Iranian risk premium?
I would argue that it’s fairly subdued but partly because of the track record of President Trump the recent events whether it be the attack last March on the Iranian oil facilities or the removal of Nicolas Maduro from Venezuela the US has used strategic points to try to do the least amount of damage to oil facilities and thereby the oil market.
Some are arguing that the risk premium in oil is anywhere from $4 to $10 a barrel but many are warning this could be on the light side if the Iranians attacked the Strait of Hormuz.
If you need to be reminded the Strait of Hormuz continues to serve as the world’s most critical energy chokepoint, with total oil transit volumes (including crude oil, condensate, and petroleum products) averaging approximately 20 million barrels per day (b/d) in 2024—equivalent to about 20% of global petroleum liquids consumption and more than one-quarter of global seaborne oil trade—according to the latest U.S. Energy Information Administration () analysis based on Vortexa tanker tracking.
Flows remained relatively flat in the first quarter of 2025 compared to 2024 levels, with no major sustained disruptions reported through early 2026 despite occasional Iranian military drills and partial/temporary measures amid heightened regional tensions.
While some sources like Kpler cite lower figures of around 13–15 million b/d for seaborne crude specifically in 2025 (reflecting narrower scope excluding products or condensates), EIA’s comprehensive data consistently supports the ~20 million b/d total for oil liquids.
Key exporters include as the largest at roughly 5.5 million b/d (about 38% of crude/condensate flows), followed by Iraq at ~3.2 million b/d, the UAE at ~1.9–2 million b/d, Kuwait at ~1.3–1.5 million b/d, and Iran at ~1.3–1.7 million b/d (with approximately 90% directed to China); Qatar and others add smaller contributions, particularly condensates. Importers are overwhelmingly Asian, with ~84% of crude oil and condensate shipments destined for Asian markets in 2024, led by China (the single largest importer), India, Japan, and South Korea (combined ~69% of flows in recent data), while smaller volumes reach other regions, including limited U.S. imports of ~0.5 million b/d from the area in 2024 (about 2% of U.S. consumption).
For liquefied natural gas (LNG), approximately 20% of global trade transited the strait in 2024 (with similar references holding into 2025 contexts), driven primarily by Persian Gulf exports. Qatar remains the dominant exporter at ~9.3 billion cubic feet per day (Bcf/d), with the UAE contributing a smaller ~0.7 Bcf/d, together accounting for nearly all such Gulf LNG flows through Hormuz. Asian markets absorbed ~83% of these volumes in 2024, with China, India, and South Korea as the top destinations (~52% of Hormuz LNG flows); additional Asian buyers (e.g., Pakistan, Taiwan) and select European countries (e.g., Italy, Belgium, Poland) also depend on it, where Qatar LNG represented around 10% of Europe’s imports in some estimates. Minor counter-flows of LNG occur (e.g., to Kuwait or the UAE)
Some worry about shortages as Iran though sanctioned still pumps around 3.3 million barrels a day, and if exports get cut off (or worse, Hormuz gets jammed), we’re talking major supply squeezes that could yank millions of barrels off the market, spiking global prices and fueling inflation. Markets are front-running that by adding the premium now, so it’s like insurance against empty tanks down the line.
War risk premiums for tankers skyrocket when tensions flare. We’re already seeing jumps in insurance costs for ships in the Gulf, sometimes hitting 0.001% to way higher (like 2% of vessel value in risky zones), because underwriters gotta cover potential attacks or seizures. That gets passed on, adding dollars per barrel to the final tab. Tanker rates for supertankers like VLCCs (very large crude carriers) hauling from the Middle East to China) have nearly tripled this year to around $151k a day, the highest since 2020.
Fewer owners want to risk their ships in hot zones, so supply tightens, freight costs climb, and that all feeds into higher delivered oil prices. If risks amp up, we could see even bigger surges, making shipping a real premium play.
We could see real supply headaches—Iran’s pumping ~3.3 million barrels a day, and even a hiccup there could push Brent way higher (some wild scenarios float $91+ by late ’26). Past flare-ups have sparked quick 4% pops, and with Geneva talks kicking off soon, that uncertainty could keep the premium sticky or even grow if headlines stay tense. It’s like the market’s saying, “Better safe than sorry—let’s price in some escalation buffer.
On the flip side, the more relaxed (bearish) view is cheering: “This premium’s probably overstated and ready to melt away!” President trump in the past with other impacts if we mentioned has been very sensitive to the cost of oil and on the attack last March on Iran’s infrastructure as well as the quick removal of Nicolas Maduro, we saw that the places that the oil was protected. Most war for oil are selling events. They buy the rumor and sell the fact.
No big disruptions so far, Oil should a fall back into Its old 55 to 65 trading range
Plus, backups like Saudi/UAE pipelines could soften any short-term hits.
Also we can release this from the US Strategic Petroleum Reserve and the possibility of the International Energy Agency also releasing oil assuming that the Strait of Hormuz is compromised which in my opinion is a short term risk because if Iran decided to shut down the Strait of Hormuz that would be viewed under International Maritime law as an act of war if they close down in international see passageway that’s like declaring war on the rest of the world.
And of course, there’s still talks in Geneva and while it’s unlikely that the tensions will go away any sign of a peace deal could see an evaporation of $7 to $10 in oil very quickly. On the other hand, if it looks like we’re going to see an attack, and it looks like it’s some of that we could see oil prices rally $7 to $10.
This comes as many are wondering what happened to the promised oil glut. Goldman Sachs is dialing back its predictions about the oil glut.
According to Investing reports, Goldman Sachs has bumped up its oil price forecasts for the fourth quarter of 2026, citing tighter OECD inventories. Even so, the bank is sticking to its belief that there will still be a pretty big surplus globally.
With this in mind, Goldman raised its estimates for Brent and WTI in the fourth quarter of 2026 by $6, now expecting Brent to hit $60 per barrel and WTI to reach $56. They still think Brent will drop to $60 by the end of 2026, which they see as the low point for the cycle, as risk premiums fade and inventories eventually climb. Interestingly, Goldman made this revision while keeping its forecast of a global oil surplus at 2.3 million barrels per day for 2026. Their strategists pointed out that lower OECD inventories have a bigger impact on pricing and now believe only 19% of global inventory builds will show up in OECD commercial stocks, down from the previous estimate of 27%. The rest? They expect around 25% will be stored as Russian and Iranian crude floating at sea, thanks to ongoing demand shortfalls for sanctioned oil. If you leave out those floating barrels, the real surplus would shrink to 1.7 million barrels per day.
When it comes to supply, Goldman still sees strong growth outpacing demand next year. They’re sticking to their 2026 surplus outlook, assuming there are no major supply disruptions and no peace deal between Russia and Ukraine. They also mentioned that January’s disruptions in Kazakhstan and Venezuela were mostly temporary.
Looking further ahead, Goldman Sachs expects oil prices to pick up from 2027 as the market gets back in balance.
Their strategists predict Brent and WTI will average $65 and $61 in 2027, and could reach $70 and $66 by December 2027, thanks to strong demand growth and slower growth from non-OPEC suppliers. Geopolitics are still a big wild card.
The strategists said risks to their outlook could go either way, but they think the odds are tilted toward prices rising. For example, if Iranian supply takes a 1 million barrel-per-day hit, Brent could jump to around $68 by late 2026.
Just another day in California in the world of gasoline where their goal is to make it even more expensive.
Bloomberg News is reporting that US supplies of gasoline are being shipped to California via the Bahamas, adding cost to the state’s expensive gasoline market. California is increasing its gasoline imports, with more than 40% coming from the Bahamas in November, due to a combination of disappearing oil refineries and a lack of interstate pipelines. The Jones Act, a 106-year-old maritime law, is contributing to the phenomenon, as it requires goods shipped between US ports to travel on US-built, owned, and operated vessels, which are in short supply and expensive to charter.
traders were shocked to find out that winter really wasn’t over yet and that caused the rally as New York City gets buried in snow!
Things were so bad that New York Mayor Zohran Mamdani wasn’t offering over $20.00 an hour to shovel the snow Yet needs more ID to shovel the snow than you do to vote in New York City. I’m not sure if they’re providing the shovelers with shovels but we’ll have to wait and find out. Natural gas is rising due to the cold front and current weather forecast.
Fox Weather reports that a historic nor’easter blizzard is hammering the I-95 corridor and could become one of the most significant snow events in years as millions are experiencing the impacts.
More than 250 thousand customers are without power as intense wind gusts continue and snow has already started to accumulate, crippling tree limbs in New Jersey, with some areas across the Northeast already surpassing a foot of snow. Over 10,000 flights have already been canceled through Tuesday, accompanied by more than 8,000 delays. States of Emergency were issued in New York and New Jersey and have now been expanded to Connecticut, Delaware, Massachusetts, Rhode Island and Maryland.
EBW highlighted that last week, March natural gas contracts briefly dipped below $3.00 per MMBtu but bounced back above $3.00 on Friday, thanks to renewed buying, higher demand, and lingering cold weather up in Canada.
Over the weekend, the forecast got even better, with colder temperatures expected in the next ten days and a bigger jump in demand. While warmer weather farther out could limit how much prices rise, strong production could keep things steady this spring. The real spring not that fake spring that we just had.
