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Shipping costs through the Strait of Hormuz are rising — even as oil prices are dropping. So what happens if Iran closes the waterway? - MarketWatch

1. Shipping and insurance costs spike despite falling oil prices. 2. Current conflict benefits shippers and insurers; consumers see lower oil costs. 3. Shipping rates have more than doubled since June 12; insurance rates surged. 4. Closure of Strait of Hormuz would inflict economic pain for Iran but is unlikely. 5. U.S. oil supplies are stable, limiting impacts from potential strait closure.

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FAQ

Why Neutral?

While shipping costs are rising, the overall supply remains stable. Historical incidents show that similar tensions often do not drastically alter oil prices unless supply is threatened.

How important is it?

Current geopolitical tensions directly influence shipping dynamics, impacting CL.1 fluctuations. However, the strong U.S. production level may buffer against severe price impacts.

Why Short Term?

Current market impacts are felt primarily in the short term due to insulation from U.S. oil production. Any escalation in conflict or closure could change this view quickly.

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