Why More Oil Isn't Lowering Prices | What's the Market Missing?

High oil prices persist despite a recovery in Middle Eastern shipment volumes because the cost of moving crude—driven by elevated freight, insurance, and security risks—remains extraordinarily high. Iran effectively leverages this dynamic by maintaining a credible threat of attack, forcing the market to price in significant risk premiums without needing to fully close the Strait of Hormuz. While recent fluctuations in tanker attacks may suggest a temporary easing, these are likely tactical adjustments tied to the timing of the U.S. midterms and Israeli elections rather than a fundamental shift in strategy. Diplomatic efforts to secure Russian diesel supplies offer little relief, as they fail to address underlying refining shortages or Iran's geopolitical leverage. Consequently, the current market environment remains bullish for oil, as the fundamental confrontation between Iran and the West continues to drive persistent energy price volatility.