Oil surge due to Hormuz blockade

What happened: Oil prices surged due to geopolitical tensions in the Middle East, specifically the closure and threatened blockade of the Strait of Hormuz. On June 1st, WTI crude oil hit a one-week high, while Brent crude surpassed $118 on June 2nd, following reports of an extended U.S. blockade on Iranian ports. Oil prices have more than doubled since the start of the Iran war, from $70 to over $100.

Market impact: The energy sector has been significantly affected. Oil and gasoline prices have risen sharply, with U.S. gasoline prices climbing to $4.48 per gallon. Energy stocks have also benefited, with some analysts suggesting a defensive portfolio strategy and investing in oil stocks. Global oil supplies have tightened due to reduced exports from Iran and the UAE's OPEC exit announcement.

What to watch next: On June 5th, the U.S. is expected to announce its decision on whether to extend the Iran nuclear deal, which could impact oil prices. Additionally, the June 15th OPEC+ meeting will provide insights into potential changes in oil production quotas. Lastly, keep an eye on the June 30th U.S. inventory report, which could indicate changes in domestic oil supply and demand dynamics.