The oil risk premium shoots up

Data: Financial Modeling Prep; Chart: Emily Peck/AxiosOil prices are back to the high levels of March as investors price in the growing risk that the Iran war will escalate.Why it matters: Higher energy prices ripple through the entire economy, pushing up inflation.The recent rise in oil has also put stocks under pressure: Both the S&P 500 and Nasdaq declined last week as prices climbed.Where it stands: On Sunday night, when the oil market opened, the price of a barrel of Brent crude for December delivery fell slightly to $115 — after closing in the previous trading session at its highest price since April. Catch up quick: Just over the last week, the price had already spiked nearly 7% in reaction to reports that the U.S. and Israel plan to restart attacks after the midterms.Between the lines: The gains appear to be due to what energy analysts are calling a "geopolitical risk premium." That's because the supply of oil from the Persian Gulf region is nearly back to pre-war levels, according to September data analyzed by Robin Brooks, an economist at the Brookings Institution. And demand hasn't moved up in any meaningful way."A very large" risk premium is getting priced in, Brooks w…

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