๐ Why oil rose above $116 (simple explanation)
Oil prices crossing $116 per barrel is mainly due to fear of supply disruption โ not just actual shortage.
๐ 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.
๐ When war happens in oil-rich regions, markets panic.
๐ข 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.
๐ If this route closes โ global oil supply drops โ prices rise fast.
๐ 3. Supply fear = price spike
Even if oil isnโt fully cut off yet:
Traders expect shortages
Companies start buying early
Prices go up quickly
๐ This is called โrisk premiumโ in markets.
๐ 4. Prices already jumped a lot
Oil has risen 50โ60% in one month due to the conflict
It even briefly touched $119+ recently
๐ผ๏ธ Simple visual (concept)
Think of oil price like this:
Normal situation:
Supply ========= Demand โ Stable price
War situation:
Supply ===== Demand โ Price shoots up โ
(fear of shortage)
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