Global oil prices cratered 15% this week as missile strikes between Iran and Israel reignited fears of prolonged Middle East instability. Analysts warn the nosedive reflects weakening industrial demand as much as geopolitical flashpoints.
Oil market chaos intensified Wednesday when Brent crude dropped to $81/barrel, its lowest since October 2023. Citigroup’s Edward Morse predicts:
This isn’t just about geopolitics – it’s a perfect storm of overproduction and climate policy pressures.
Three factors dominate the crisis:
- U.S. shale output reaching 13.3M barrels/day
- Saudi Arabia delaying production cuts
- EU countries fast-tracking solar adoption
Energy economists urge caution, noting volatility could reverse if OPEC+ agrees to output limits at next month’s summit. Nevertheless, the energy transition looms large – renewables now account for 22% of global electricity.
