Oil prices face risk with rising Middle East tensions


Our recent Insight report, Rising Middle East tensions put political risk back into play for oil prices, examines how escalating tensions between Saudi Arabia and Iran raises the prospect of geopolitics once again affecting oil prices during 2016.

With the year off to a tumultuous start in the Middle East and China's equity market experiencing a sharp fall, oil prices are reacting quickly. Our Macro Oils team forecasts continued global oversupply in the first half of 2016, which should help quell the oil price response as tensions escalate between Saudi Arabia and Iran.

While it's unclear what geopolitical developments lay ahead, our analysts predict a stalwart Saudi Arabia continuing to seek market share, along with a decline in non-OPEC supply for 2016 — a sharp contrast to forecasts just one year ago. With demand forecasted to grow, Wood Mackenzie sees the supply-demand balance tighten in coming months, making oil prices more susceptible to political risk.


Learn more
To explore more implications of rising Middle East tensions on the oil market, you can purchase our full Insight report. Or to dive deeper into our OPEC supply forecast for 2016, you can also purchase our detailed Insight report, Wild card for 2016 oil market: OPEC supply uncertainty.

You may also be interested in our analysis on the long-term global outlook for oil markets leading up to the current market climate, as well as our most recent short-term monthly outlook, which examines the geopolitical influences on supply and demand.

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