Are Geopolitical Fears Fueling the Next Big Move in Oil Prices?
Source: Kapitales Research
Highlights:
Oil rally gains momentum: Brent crude climbed above US$72 per barrel, rising about 18% since the end of last year as supply shocks and geopolitical risks pushed prices higher.
US-Iran tensions drive volatility: Traders are building hedges amid fears of possible US military action against Iran, adding a significant geopolitical risk premium to crude prices.
Uncertain outlook ahead: Despite strong global output, rising conflict risks and sanctions continue to cloud expectations of an oil surplus in 2026.
Strongest start to the year fuels oil rally
Global oil markets are experiencing their strongest start since 2022, with traders rapidly adjusting positions amid growing geopolitical risk. Brent crude futures recently climbed above US$72 per barrel, reaching a multi-month high as supply disruptions and sanctions reshaped expectations of a market surplus. At the time of writing, prices remain elevated after rising roughly 18% since the end of last year, signalling a major shift from earlier forecasts that predicted oversupply. Market analysts say increasing activity in futures and options markets reflects investors trying to hedge against the possibility of renewed military conflict in the Middle East. The rally also highlights how geopolitical developments continue to outweigh traditional supply-and-demand expectations.
Geopolitical fears add risk premium to crude
Oil traders are closely watching U.S. policy signals after President Donald Trump indicated he was considering potential military action against Iran. Concerns about disruption around key shipping routes, particularly the Strait of Hormuz, have driven a noticeable risk premium into prices. Experts believe the market may be pricing in as much as US$10 per barrel in geopolitical risk, as volatility climbs and hedging demand increases. Despite the rally, prices have not surged dramatically higher due to rising global output and relatively stable inventories.
What traders are watching next
The oil market now faces a delicate balance between supply expansion and escalating political tension. While analysts had expected 2026 to bring a surplus, ongoing sanctions, military uncertainty, and shifting trade policies are complicating that outlook. Investors will be monitoring diplomatic developments and production data closely in the coming weeks. If tensions ease, prices could stabilise — but any escalation may quickly drive crude higher, potentially reshaping energy markets and inflation expectations worldwide.
Disclaimer for Kapitales Research
The materials provided by Kapitales Research, including articles, news, data, reports, opinions, images, charts, and videos ("Content"), are intended for personal, non-commercial use only. The primary goal of this Content is to educate and inform readers. This Content is not meant to offer financial advice, nor does it include any recommendation or opinion that should be relied upon for making financial decisions. Certain Content on this platform may be sponsored or unsponsored, but it does not serve as a solicitation or endorsement to buy, sell, or hold any securities, nor does it encourage any specific investment activities. Kapitales Research is not authorized to provide investment advice, and we strongly advise users to seek guidance from a qualified financial professional, such as a financial advisor or stockbroker, before making any investment choices. Kapitales Research disclaims all liability for any direct, indirect, incidental, or consequential damages arising from the use of the Content, which is provided without any warranties. The opinions expressed by contributors or guests are their own and do not necessarily reflect the views of Kapitales Research. Media such as images or music used on this platform are either owned by Kapitales Research, sourced through paid subscriptions, or believed to be in the public domain. We have made reasonable efforts to credit sources where appropriate. Kapitales Research does not claim ownership of any third-party media unless explicitly stated otherwise.
Customer Notice:
Nextgen Global Services Pty Ltd trading as Kapitales Research (ABN 89 652 632 561) is a Corporate Authorised Representative (CAR No. 1293674) of Enva Australia Pty Ltd (AFSL 424494). The information contained in this website is general information only. Any advice is general advice only. No consideration has been given or will be given to the individual investment objectives, financial situation or needs of any particular person. The decision to invest or trade and the method selected is a personal decision and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of this product for your circumstances. Please be aware that all trading activity is subject to both profit & loss and may not be suitable for you. The past performance of this product is not and should not be taken as an indication of future performance.
Kapitales Research, Level 13, Suite 1A, 465 Victoria Ave, Chatswood, NSW 2067, Australia | 1800 005 780 | info@kapitales.com.au
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Are Geopolitical Fears Fueling the Next Big Move in Oil Prices?
Highlights:
Strongest start to the year fuels oil rally
Global oil markets are experiencing their strongest start since 2022, with traders rapidly adjusting positions amid growing geopolitical risk. Brent crude futures recently climbed above US$72 per barrel, reaching a multi-month high as supply disruptions and sanctions reshaped expectations of a market surplus. At the time of writing, prices remain elevated after rising roughly 18% since the end of last year, signalling a major shift from earlier forecasts that predicted oversupply. Market analysts say increasing activity in futures and options markets reflects investors trying to hedge against the possibility of renewed military conflict in the Middle East. The rally also highlights how geopolitical developments continue to outweigh traditional supply-and-demand expectations.
Geopolitical fears add risk premium to crude
Oil traders are closely watching U.S. policy signals after President Donald Trump indicated he was considering potential military action against Iran. Concerns about disruption around key shipping routes, particularly the Strait of Hormuz, have driven a noticeable risk premium into prices. Experts believe the market may be pricing in as much as US$10 per barrel in geopolitical risk, as volatility climbs and hedging demand increases. Despite the rally, prices have not surged dramatically higher due to rising global output and relatively stable inventories.
What traders are watching next
The oil market now faces a delicate balance between supply expansion and escalating political tension. While analysts had expected 2026 to bring a surplus, ongoing sanctions, military uncertainty, and shifting trade policies are complicating that outlook. Investors will be monitoring diplomatic developments and production data closely in the coming weeks. If tensions ease, prices could stabilise — but any escalation may quickly drive crude higher, potentially reshaping energy markets and inflation expectations worldwide.
Disclaimer for Kapitales Research
The materials provided by Kapitales Research, including articles, news, data, reports, opinions, images, charts, and videos ("Content"), are intended for personal, non-commercial use only. The primary goal of this Content is to educate and inform readers. This Content is not meant to offer financial advice, nor does it include any recommendation or opinion that should be relied upon for making financial decisions. Certain Content on this platform may be sponsored or unsponsored, but it does not serve as a solicitation or endorsement to buy, sell, or hold any securities, nor does it encourage any specific investment activities. Kapitales Research is not authorized to provide investment advice, and we strongly advise users to seek guidance from a qualified financial professional, such as a financial advisor or stockbroker, before making any investment choices. Kapitales Research disclaims all liability for any direct, indirect, incidental, or consequential damages arising from the use of the Content, which is provided without any warranties. The opinions expressed by contributors or guests are their own and do not necessarily reflect the views of Kapitales Research. Media such as images or music used on this platform are either owned by Kapitales Research, sourced through paid subscriptions, or believed to be in the public domain. We have made reasonable efforts to credit sources where appropriate. Kapitales Research does not claim ownership of any third-party media unless explicitly stated otherwise.
Customer Notice:
Nextgen Global Services Pty Ltd trading as Kapitales Research (ABN 89 652 632 561) is a Corporate Authorised Representative (CAR No. 1293674) of Enva Australia Pty Ltd (AFSL 424494). The information contained in this website is general information only. Any advice is general advice only. No consideration has been given or will be given to the individual investment objectives, financial situation or needs of any particular person. The decision to invest or trade and the method selected is a personal decision and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of this product for your circumstances. Please be aware that all trading activity is subject to both profit & loss and may not be suitable for you. The past performance of this product is not and should not be taken as an indication of future performance.
Kapitales Research, Level 13, Suite 1A, 465 Victoria Ave, Chatswood, NSW 2067, Australia | 1800 005 780 | info@kapitales.com.au