Oil near five-month high - ING

The oil market remains on edge with the conflict between Israel and Iran entering its sixth day, ING's commodity experts Ewa Manthey and Warren Patterson note.

Oil market fears the shutdown of the Strait of Hormuz

"Prices have rallied around 10% since Israel started its attack on Iran last week and are now close to a five-month high after US President Trump met with his national security team on Tuesday to discuss the escalating conflict, sparking speculation that the US could be preparing to join the attack."

"The biggest fear for the oil market is the shutdown of the Strait of Hormuz. This could impact oil flows from the Persian Gulf. Almost a third of global seaborne oil trade moves through this chokepoint. A significant disruption to these flows would be enough to push prices to $120/bbl."

"OPEC's spare capacity would not help the market in this case, as most of it is located in the Persian Gulf. Under this scenario, we would need to see governments tap into their strategic petroleum reserves, although this would only be a temporary fix."