Despite initial concerns over disruptions in oil supplies following news of Israel’s attack on Iran, Brent and WTI crude oil prices spiked on April 19. However, the market quickly stabilized, with prices closing at the same level as the opening price. The conflict in the Middle East has not significantly affected oil supply in the region. Factors such as abundant global supply, increasing oil production in the US, and the resumption of output in Libya have contributed to the market stability. Additionally, the Organization of the Petroleum Exporting Countries and its allies have ample production capacity, further helping to control oil prices.
According to analyst Tamas Varga, the current market conditions indicate a level of stability despite geopolitical uncertainties. Energy analysis firm Rystad Energy believes that the fundamental price of Brent is around $83 per barrel, indicating that the current price of $87 already accounts for geopolitical risks. The International Energy Agency estimates that OPEC+ has spare capacity of up to 6 million barrels a day, reducing the likelihood of supply disruptions. As a result, price fluctuations in response to supply and demand risks are expected to be softened.
The narrowing price difference between May and November deliveries of Brent oil suggests a decrease in scarcity. OPEC+’s ability to maintain production levels and the market’s awareness of ample supply buffers help to mitigate price volatility. Overall, experts suggest that factors such as abundant global supply and increasing production in non-OPEC countries are helping to balance out any potential impact from geopolitical uncertainties in the Middle East region
