1 big thing: Geopolitics roars into oil market

Screenshot: Chart in EIA brief , "The Strait of Hormuz is the world's most important oil transit chokepoint"

Crude oil prices surged yesterday and are heading upward again this morning amid escalating tensions in the Middle East.

Why it matters: The upward moves show how geopolitical conflict is at least temporarily in the driver's seat in oil markets, after weeks of humdrum economic news sending prices largely downward.

What's new: "Brent oil rallied above $65 per barrel on Friday and was on track for a 5% gain this week on fears of a U.S. military attack on Iran that would disrupt flows from the Middle East," Reuters reports.

West Texas Intermediate saw its biggest one-day gain of the year yesterday and the global benchmark Brent crude had its biggest climb since January.

Per Bloomberg, the Fed's hints that it may cut interest rates and signs that the U.S. and China will resume trade talks also boosted prices.

Where it stands: The New York Times reported late last night that "President Trump approved military strikes against Iran in retaliation for downing an American surveillance drone," but then pulled back.

The big picture: Check out the chart above via the Energy Information Administration. One reason why the U.S.-Iran strife is rattling oil markets is that roughly one-fifth of total demand flows through the Strait of Hormuz each day.

The U.S. isn't insulated from the risks, despite the domestic production boom, declining imports from the Middle East, and the majority of oil that passes through Hormuz heading to Asia.

Axios Expert Voices contributors Richard Newell and Daniel Raimi of the nonpartisan think tank Resources for the Future have more on this...