📈 Why oil rose above $116 (simple explanation)
Oil prices crossing $116 per barrel is mainly due to fear of supply disruption — not just actual shortage.
🔑 1. War in the Middle East
A major conflict involving Iran, Israel, and the U.S. has escalated.
Attacks (including missiles and drones) have increased instability.
👉 When war happens in oil-rich regions, markets panic.
🚢 2. Strait of Hormuz risk (VERY important)
This narrow sea route carries about 20% of global oil supply.
Iran has restricted or threatened shipping there.
👉 If this route closes → global oil supply drops → prices rise fast.
📉 3. Supply fear = price spike
Even if oil isn’t fully cut off yet:
Traders expect shortages
Companies start buying early
Prices go up quickly
👉 This is called “risk premium” in markets.
📊 4. Prices already jumped a lot
Oil has risen 50–60% in one month due to the conflict
It even briefly touched $119+ recently
🖼️ Simple visual (concept)
Think of oil price like this:
Normal situation:
Supply ========= Demand → Stable price
War situation:
Supply ===== Demand → Price shoots up ↑
(fear of shortage)
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