Very smart people tell me that the oil futures market is an important economic tool that will bring rationality into the way oil markets work. Maybe. I just don't understand how they operate.
For example, when Bhutto was assassinated in Pakistan (a terrible tragedy), the futures price of oil jumped several dollars per barrel, presumably because of skittishness and concerns that her assassination was a sign that oil disruptions might someday become a reality because of a resurgent and confident Al Qaeda. However, in just the last two days, the press has been plastered with reports that Iranian fastboats approached three U.S. Navy ships in the Straits of Hormuz (see here), dropping boxes in the path of the Navy ships, and almost drawing fire from the Navy. This incident was an even starker reminder to people that the risk of oil disruptions is very real. Yet, oil prices DROPPED a few dollars per barrel in response.
Can anyone explain this conundrum to me?