Global Markets | Crude markets on edge as Middle East tensions mount: What’s next for oil prices?

The global oil market is navigating unprecedented turbulence following recent geopolitical developments in the Middle East, with Brent crude experiencing wild swings in early trading this week.

According to commodity analyst Vandana Hari from Vanda Insights, the volatility underscores the uncertainty dominating energy markets.

“This morning, Brent crude rose almost $10 per barrel from Friday's settlement, hitting just over $82 early in trading. But it has since retreated to around $76 a barrel,” Hari said.


She attributed the swings to both market uncertainty and rapidly changing news. “There is a lot of confusion, almost chaos, as the market tries to assess the weekend's events. It is completely unprecedented. There’s really no playbook to follow,” she explained.

The market is reacting to potential diplomatic shifts as well. “Donald Trump said he is open to returning to negotiations, and Iran’s security chief reportedly reached out to mediators in Oman. The outcome could either disrupt flows from the Middle East or restore some stability,” Hari added.

OPEC’s recent decision to raise output by only 206,000 barrels per day, less than expected, has also caught attention.

“They made this decision under extremely unpredictable circumstances. While OPEC+ had planned to resume unwinding cuts of about 1.24 million barrels per day, the weekend events changed the context,” Hari said.

She described the move as cautious. “If Middle Eastern volumes are disrupted, it doesn’t make sense for the G-8 members to increase supply. This is more of a tentative, wait-and-watch decision than a strategic bet.”

Questions are mounting over alternative shipping routes if the Strait of Hormuz is blocked. “Should the Strait of Hormuz close, the focus shifts to the Red Sea. Saudi Arabia could redirect about 7 million barrels per day there, and Iraq has some capacity too. But with 21 million barrels per day at risk, it won’t balance the equation,” she explained.

The LNG market could also face disruptions. “Qatar, the biggest LNG supplier, passes most shipments through the Strait of Hormuz, along with some from the UAE. If blocked, LNG ships would face the same chaos, and we could see spikes not just in oil but gas and LNG markets as well,” Hari said.

As markets watch the situation unfold, investors are bracing for volatility, closely monitoring both diplomatic developments and energy supply routes that could reshape global oil and gas dynamics in the weeks ahead.