The recent escalation in regional tensions sparked a sharp response across global markets, with oil prices briefly surging above $80 amid heightened uncertainty. Fortunately, the situation evolved rapidly. Nerves had calmed when a temporary ceasefire was announced.
This also served to ease immediate concerns around important energy routes such as the Strait of Hormuz. Oil markets adjusted accordingly, with prices falling below $70 within hours.
While the geopolitical situation remains fluid, the recent developments reinforce our long-standing view that the likelihood of sustained and material disruption to oil supply remains low. Historically, price spikes driven by geopolitical tensions are usually short-lived, and often return to baseline in weeks rather than months; the recent situation is likely to follow this pattern.
Vital export infrastructure around the Arabian Gulf remains fully operational and trade flows are uninterrupted at this time. Shipping costs did briefly reflect elevated risk perceptions, but fortunately no significant bottlenecks materialised.
Most geopolitical conflicts in recent years have nourished supply fears without causing actual supply disruptions. Even disruption – events that curbed oil flows out of the region, such as the attack on the Saudi Khurais terminal in 2019, only briefly jolted oil prices.
We need to look back all the way to the early 1990s and the Gulf war to find a geopolitical conflict that caused serious supply disruptions and price spike that lasted months rather than weeks.
The oil price reaction was to some extent surprisingly unemotional, not least given that the Israel-Iran war was among the main wild cards for oil. One explanation is the resilience of today’s oil market. Storage is ample in the Western world, and especially in China.
Saudi Arabia, Kuwait, and the UAE have plentiful spare capacity, exceeding 5 per cent of global output, which they have just begun to bring back to the market. Exports are incrementally growing from the Americas, and Brazil and Guyana specifically. Demand is soft for economic and structural reasons. The oil market is heading for a surplus as South American supply on its own is sufficient to meet projected overall demand growth this year.
China, the major buyer of Iranian oil, is itself undergoing a significant transition as its dependence on oil imports begins to ease.
Road fuel demand is softening due to electric vehicle sales now accounting for more than half of new car registrations. Meanwhile, the country’s petrochemical sector is shifting away from crude oil feedstocks towards alternatives like natural gas liquids, which is supported by the liquefied natural gas boom. This shift points to longer-term structural changes in global consumption that reinforce the sense of supply abundance.
Although geopolitics and supply fears are at the forefront of people's minds these days, oil prices are trading at almost half the levels seen in the early 2010s after adjusting for inflation. The oil market has changed significantly in the meantime and has become more resilient. Today’s geopolitics is unlikely to change the big picture and the established fundamental trends.
Adding to the supply abundance is the petro-nations' U-turn from defending prices to regaining market share. These dynamics are increasing competition and putting downwards pressure on prices, to the point where something in the market gives way. In this case, it is US shale oil drilling and output at around $60.
The US's energy dominance appears to be peaking. Likewise, the shadow oil market should continue to thrive. There will always be demand for discounted oil sourced outside of Western sanctions. These flows add to today’s supply resilience. Irrespective of the outcome, the current conflict will have little impact on the multipolar world order, of which these oil flows are just one symptom.
The oil market remains on a twisted road to abundance, which should pressure prices back towards $60. Geopolitical tensions seem to be a distraction on this pathway, an element that fuels sentiment swings.
The bearish market mood in May provided room to support the price bounce with futures positions shifting towards the long side. But as the situation calmed, those positions reversed, prices began to align with fundamentals and the sentiment-related risk premium deflated.
Geopolitical events will always be a feature of oil market dynamics. But their impact should not be overestimated.
Norbert Ruecker is head of Economics & Next Generation Research at Julius Baer
The specs
Engine: 2.0-litre 4cyl turbo
Power: 261hp at 5,500rpm
Torque: 405Nm at 1,750-3,500rpm
Transmission: 9-speed auto
Fuel consumption: 6.9L/100km
On sale: Now
Price: From Dh117,059
MATCH INFO
Manchester United 1 (Rashford 36')
Liverpool 1 (Lallana 84')
Man of the match: Marcus Rashford (Manchester United)
UAE currency: the story behind the money in your pockets
THE CLOWN OF GAZA
Director: Abdulrahman Sabbah
Starring: Alaa Meqdad
Rating: 4/5
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
The specs
AT4 Ultimate, as tested
Engine: 6.2-litre V8
Power: 420hp
Torque: 623Nm
Transmission: 10-speed automatic
Price: From Dh330,800 (Elevation: Dh236,400; AT4: Dh286,800; Denali: Dh345,800)
On sale: Now
Conflict, drought, famine
Estimates of the number of deaths caused by the famine range from 400,000 to 1 million, according to a document prepared for the UK House of Lords in 2024.
It has been claimed that the policies of the Ethiopian government, which took control after deposing Emperor Haile Selassie in a military-led revolution in 1974, contributed to the scale of the famine.
Dr Miriam Bradley, senior lecturer in humanitarian studies at the University of Manchester, has argued that, by the early 1980s, “several government policies combined to cause, rather than prevent, a famine which lasted from 1983 to 1985. Mengistu’s government imposed Stalinist-model agricultural policies involving forced collectivisation and villagisation [relocation of communities into planned villages].
The West became aware of the catastrophe through a series of BBC News reports by journalist Michael Buerk in October 1984 describing a “biblical famine” and containing graphic images of thousands of people, including children, facing starvation.
Band Aid
Bob Geldof, singer with the Irish rock group The Boomtown Rats, formed Band Aid in response to the horrific images shown in the news broadcasts.
With Midge Ure of the band Ultravox, he wrote the hit charity single Do They Know it’s Christmas in December 1984, featuring a string of high-profile musicians.
Following the single’s success, the idea to stage a rock concert evolved.
Live Aid was a series of simultaneous concerts that took place at Wembley Stadium in London, John F Kennedy Stadium in Philadelphia, the US, and at various other venues across the world.
The combined event was broadcast to an estimated worldwide audience of 1.5 billion.
The bio
Who inspires you?
I am in awe of the remarkable women in the Arab region, both big and small, pushing boundaries and becoming role models for generations. Emily Nasrallah was a writer, journalist, teacher and women’s rights activist
How do you relax?
Yoga relaxes me and helps me relieve tension, especially now when we’re practically chained to laptops and desks. I enjoy learning more about music and the history of famous music bands and genres.
What is favourite book?
The Perks of Being a Wallflower - I think I've read it more than 7 times
What is your favourite Arabic film?
Hala2 Lawen (Translation: Where Do We Go Now?) by Nadine Labaki
What is favourite English film?
Mamma Mia
Best piece of advice to someone looking for a career at Google?
If you’re interested in a career at Google, deep dive into the different career paths and pinpoint the space you want to join. When you know your space, you’re likely to identify the skills you need to develop.
More from Rashmee Roshan Lall
VEZEETA PROFILE
Date started: 2012
Founder: Amir Barsoum
Based: Dubai, UAE
Sector: HealthTech / MedTech
Size: 300 employees
Funding: $22.6 million (as of September 2018)
Investors: Technology Development Fund, Silicon Badia, Beco Capital, Vostok New Ventures, Endeavour Catalyst, Crescent Enterprises’ CE-Ventures, Saudi Technology Ventures and IFC
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Summer special
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How to avoid crypto fraud
- Use unique usernames and passwords while enabling multi-factor authentication.
- Use an offline private key, a physical device that requires manual activation, whenever you access your wallet.
- Avoid suspicious social media ads promoting fraudulent schemes.
- Only invest in crypto projects that you fully understand.
- Critically assess whether a project’s promises or returns seem too good to be true.
- Only use reputable platforms that have a track record of strong regulatory compliance.
- Store funds in hardware wallets as opposed to online exchanges.
Race 3
Produced: Salman Khan Films and Tips Films
Director: Remo D’Souza
Cast: Salman Khan, Anil Kapoor, Jacqueline Fernandez, Bobby Deol, Daisy Shah, Saqib Salem
Rating: 2.5 stars
Labour dispute
The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.
- Abdullah Ishnaneh, Partner, BSA Law
ESSENTIALS
The flights
Emirates flies from Dubai to Phnom Penh via Yangon from Dh2,700 return including taxes. Cambodia Bayon Airlines and Cambodia Angkor Air offer return flights from Phnom Penh to Siem Reap from Dh250 return including taxes. The flight takes about 45 minutes.
The hotels
Rooms at the Raffles Le Royal in Phnom Penh cost from $225 (Dh826) per night including taxes. Rooms at the Grand Hotel d'Angkor cost from $261 (Dh960) per night including taxes.
The tours
A cyclo architecture tour of Phnom Penh costs from $20 (Dh75) per person for about three hours, with Khmer Architecture Tours. Tailor-made tours of all of Cambodia, or sites like Angkor alone, can be arranged by About Asia Travel. Emirates Holidays also offers packages.
More on animal trafficking
CHATGPT%20ENTERPRISE%20FEATURES
%3Cp%3E%E2%80%A2%20Enterprise-grade%20security%20and%20privacy%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20Unlimited%20higher-speed%20GPT-4%20access%20with%20no%20caps%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20Longer%20context%20windows%20for%20processing%20longer%20inputs%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20Advanced%20data%20analysis%20capabilities%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20Customisation%20options%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20Shareable%20chat%20templates%20that%20companies%20can%20use%20to%20collaborate%20and%20build%20common%20workflows%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20Analytics%20dashboard%20for%20usage%20insights%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20Free%20credits%20to%20use%20OpenAI%20APIs%20to%20extend%20OpenAI%20into%20a%20fully-custom%20solution%20for%20enterprises%3C%2Fp%3E%0A
