Oil prices have long reacted sharply to conflict in the Middle East. But this time, as Israel strikes Iran, energy markets are staying cool. No panic. No price surge.
On Thursday, Brent crude slipped 0.26% to $76.50, while US WTI dipped just 0.05% to $75.10. That’s despite days of bombing, threats of wider war, and damage to refineries near Tehran.
So, what gives?
Markets Have Changed
According to analysts, the oil market isn’t what it used to be.
“We’ve had Gaza, Lebanon, and now Iran—yet oil is still cheaper than last October,” said Ziad Daoud, chief emerging markets economist at Bloomberg. “There’s clearly a decoupling happening.”
He’s not wrong. Before the attacks, oil hovered around $67. Now it’s around $75. That’s a far cry from the $130+ spikes we’ve seen in past crises.
Here’s why:
- Global oil storage is bigger than ever.
- US shale is faster at responding to price changes.
- Economies use less oil per unit of GDP than in the 1970s.
- And alternative energy—from coal to renewables—is helping fill gaps.
The result? Markets have become numb to war headlines—unless the disruption is massive.
What Could Still Trigger a Price Spike?
This doesn’t mean we’re in the clear.
Two key risks are still on the table:
- A direct Iranian oil shutdown — Iran accounts for about 3% of global oil production.
- Closure of the Strait of Hormuz — the narrow waterway that handles 1 in 5 barrels of global oil.
If that strait were blocked?
“We’d be looking at a major oil shock,” said Daoud.
“Brent could shoot to $130 a barrel.”
For now, neither scenario has played out. But traders are watching closely.
Trump Adds Fuel to the Uncertainty
US President Donald Trump’s unclear position is keeping investors on edge. One day he hints at peace, the next he suggests backing Israel with force.
“Markets are waiting to see if this turns into a US military move or stays a regional fight,” said Priyanka Sachdeva at Phillip Nova.
Goldman Sachs says a $10 geopolitical premium is already baked into the price. If US troops get involved, Brent could easily push past $90.
Meanwhile, the Fed Stays Cautious
Adding to the mix: the Federal Reserve held interest rates steady on Wednesday but signaled two possible cuts by year-end.
That could boost oil demand — but Trump’s proposed tariffs are raising inflation fears.
“A lower rate means more economic activity, which usually lifts oil,” one analyst noted.
“But this time, tariff-driven inflation could cancel that out.”
Oil Has Grown Up
Yes, there’s war.
Yes, the region is on fire.
But oil prices are holding steady — not because the danger isn’t real, but because markets have adapted.
Unless there’s a catastrophic supply disruption or Trump escalates militarily, energy traders may keep betting on resilience.
In short: oil markets are no longer panicking — they’re calculating.
Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.
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