Oil Price Fluctuations in the Middle East: A Closer Look at Market Stability Factors

The conflict in the Middle East has not caused significant disruptions in oil supply in the region, according to experts. Despite initial concerns over disruptions 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.

Factors such as abundant global supply, increasing oil production in the US, and the resumption of output in Libya have contributed to 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, geopolitical risks have little impact on Brent’s fundamental price, which is estimated to be around $83 per barrel. Energy analysis firm Rystad Energy believes that current price fluctuations are due to supply and demand risks rather than geopolitical tensions. 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 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, current market conditions indicate a level of stability despite geopolitical uncertainties.