Something has always seemed fishy about these high oil prices. There are a couple sources that say the price includes a risk premium with regards to the war. According to the webs, there has been maybe two or three ships sunk. The cost to replace the big tankers is about $150 million. The premium covers losses up to $200 for the ship, and maybe the same for the cargo. Seems a bit rich, eh? The cargo isn't including the price of the insurance, now is it?
But there's more. The risk premium should involve only in the war zone. Why should West Texas Intermediate be up there as well? That oil never sees that kind of risk.
Who is doing the insuring? Lloyds of London is one, there is another that slips the mind.
It seems like someone is making out like a bandit here.
As for the war itself, the number of attacks are on the rise. How? All their capabilities have been degraded, eh? Not entirely. It seems that they've gone to new tactics. They've gone to using "spotters" who pose as fishermen. These "fishermen" call in the location of the tankers and other ships, and that's how they're doing it.
The big carriers have moved further away. Evidently the Trump administration is not taking any chances.
Prices at the pump seem a little lower, but not by that much.
Is there an end in sight? Yep, but not before the election. One way or another, this will end. How it will end is not exactly clear. The election will definitely clear that up one way or another.
A quick P.S.:
The risk premium is said to be anywhere from $25 to $40 per barrel. Ok. Another fact: A big tanker carries up to 2.2 million barrels. Run the math, and it is less than the covered amount of $200 million. That's why I said it was "rich". West Texas Intermediate is just under a $100 this morning, so the actual amount of loss of a big tanker with that much oil in it would be $132 million after you discount for the risk premium--$60 a barrel times 2.2 million barrels per tanker. The point is that the premiums are not only outrageous when not in a war zone, but also even in the war zone. $132 million is considerably less than it is insured for!
Update:
So, after asking, the GAB AI says that the market is essentially pricing in the worst-case scenerio. The worst-case scenario would mean a shut-down of the Strait of Hormuz so that NO OIL get through for an indefinite time.
This means a lot more than what has actually happened after 6 months of war. You hear that the Hormuz Strait is "closed". But oil is flowing through and has been. A complete loss of the Persian Gulf oil is what is being priced in. I'd say that is rather extravagant. Neither side in this war even wants that or is pursuing that. But that is what the market is pricing in.
"The market" isn't the oil market. It is the insurance market. The current insurance market is dominated by just a few players. I think they're taking advantage of the situation. If Trump is making a mistake, it is in letting this continue. Fixing the oil supply hasn't worked because the insurance market will price in a worst case scenario even if that is not the case, nor is even likely to ever be the case.