Mar 15, 2026

I just heard that despite the ongoing geopolitical tensions and disruptions in the Middle East, oil prices have remained surprisingly steady compared to previous crises. Even though exports from major Gulf producers like Iran, Iraq, Kuwait, Saudi Arabia, Qatar, and the UAE—countries that once supplied about 20% of the world’s oil—have been significantly affected, Brent crude futures are still around $103 per barrel. This is notably lower than the price spikes we saw in early 2022 during Russia’s invasion of Ukraine, when oil briefly surged to between $110 and $130 per barrel.

What’s particularly interesting is that when you adjust for inflation and the growth in U.S. disposable income, current oil prices are roughly in line with the average levels seen since the late 1980s. This means that despite the geopolitical risks, oil isn’t necessarily more expensive in real terms than it has been over the past few decades. Moreover, futures contracts for deliveries in the mid-2020s are trading below $90 per barrel, indicating that the market expects these supply disruptions to be temporary and anticipates a return to more normalized supply and pricing in the longer term.

What sets this situation apart is the sharp decline in oil volumes, which is unprecedented outside of the pandemic period. Unlike earlier oil shocks in the 1970s that saw larger price jumps but less severe volume drops, this time we’re seeing a major contraction in supply, yet prices have stayed relatively muted. This suggests the market might be more balanced or uncertain about how long the disruptions will last and their overall impact on global oil availability.

However, significant risks remain. The Strait of Hormuz, a crucial passage for a large portion of global oil shipments, remains effectively closed due to security threats involving Iranian drones, missiles, and mines. The timeline for when the strait might reopen to pre-conflict shipping levels and reasonable insurance costs is unclear. U.S. officials have pointed to Iranian aggression as the cause of the blockade, but there’s no definitive indication of when normal transit will resume.

Overall, the oil market seems to be pricing in a scenario where the current supply interruptions are temporary rather than a permanent constraint. Still, the combination of severe volume losses and ongoing geopolitical tensions keeps the situation fragile. Even though the U.S. is a net oil exporter now, it remains vulnerable to import disruptions, especially in terms of inflationary pressures. So while prices are steady for the moment, the underlying uncertainties could trigger volatility going forward.

Stay Well!