Oil Rallies on Fresh Uncertainty

The recent rally in oil prices, with Brent crude reaching $72 and WTI entering the mid-60s, stems from a geopolitical risk premium rather than a physical supply shortage. While tensions between the US and Iran have driven investors to purchase "price insurance," physical market indicators actually show softening premiums and steady global exports. Four potential outcomes range from a negotiated settlement—which could see Brent drop to the low 60s as the $7–$9 risk premium evaporates—to a severe shipping shock capable of mimicking early 2022 price spikes by disrupting 6% of seaborne supply. Despite these immediate tensions, long-term fundamentals remain bearish due to rising OPEC+ production and a projected surplus for 2026. Ultimately, unless geopolitical friction transitions into a sustained production outage, the current price surge remains a temporary logistic and psychological reaction rather than a fundamental shift in oil scarcity.