Oil's trading at four-month lows after plunging another roughly 5% on Thursday, Ben writes.
State of play: A rise in U.S. stockpiles helped fuel this week's declines, and China's modest — by its thirsty standards — demand signals also play a role.
Threat level: Escalation of the Israel-Hamas war into oil producing and transit regions would spike prices.
Yes, but: Veteran analyst Dan Yergin says powerful players have an interest in keeping things contained.
Escalatory moves by Iran or its proxies would not serve its interests, he said in a note.
- Iran is "already benefitting" from stalled Saudi-Israel normalization and Israel's embattled state.
- A spreading war could impose "direct costs" on Iran's lucrative exports.
Meanwhile, China's large imports from the region "may also serve as an important check on any effort to disrupt oil flows out of the Middle East."
Roughly half of what China imports passes through the Strait of Hormuz, Yergin notes.