Energy markets have been some of the most sensitive to geopolitical tensions in recent years. In 2022, gas and oil prices skyrocketed after the conflict in Ukraine broke out. Once most of that initial impact had settled, tensions in the Middle East sparked another round of volatility across commodities.

However, the effect proved to be temporary: as nothing has happened, Brent crude is trading below $70 per barrel again. This is good news for central banks, as lower energy prices help combat inflation. It also provides a welcome boost of optimism for stock markets such as the S&P 500 and the Dow Jones.

Is another upward surprise possible?

Perhaps, but only if something serious disrupts supply again. One of the risks in this regard could be Iran. If the nuclear agreement is not reached before the end of August and tougher sanctions are imposed on its oil exports, prices could subsequently see an upside, even without bombs falling on Tehran.

As for Venezuela, on paper, Caracas has the world’s largest oil reserves, but in reality, it barely contributes to global supply. Years of sanctions plus a lack of modern technology mean production is a shadow of what it could be. So even if U.S.–Venezuelan relations sour further, it probably won’t move the needle much.

What about OPEC+?

One might assume that the cartel would be interested in keeping oil prices as high as possible and, with that goal in mind, if they did not cut production, they would at least not increase it. But they did the opposite: +548,000 barrels per day starting in August and another 547,000 barrels per day beginning in September.

In theory, this puts the market in a good spot for oil bears. Unless a major geopolitical crisis disrupts supply from key exporters while global demand holds steady, there’s little reason for oil to climb back to $80 a barrel. But that doesn’t mean the situation can’t change dramatically in the coming weeks or months.

This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.

This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.
Some portions of this content may have been generated or assisted by artificial intelligence (AI) tools and been reviewed for accuracy and quality by our editorial team.