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The geopolitical risk premium in crude oil sits dormant most of the time, a residual embedded in the price for events that rarely materialize. Then Iran launched a ballistic missile attack on U.S.
forces, and President Trump said the United States would hit Iran hard. Oil prices surged more than 6%.
The mechanism behind the move Crude pricing carries a permanent, if usually quiet, war-risk component tied to Middle East stability.
The specific channel is supply concentration: the region holds a large share of global production and the infrastructure to move it, which means military escalation carries direct freight for the commodity even before a single barrel is disrupted.
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