New Delhi: Global crude oil prices have remained steady despite heightened tensions in the Gulf region, with the Strait of Hormuz—responsible for nearly 20 per cent of global oil shipments—remaining operational. According to a report by YES Securities, oil markets are currently supported by a projected surplus of 0.9 million barrels per day (mbpd) and a 4 mbpd spare production capacity held by OPEC.
The report noted that Iran, which exports 1.5 mbpd of crude oil, has historically avoided actions that would jeopardise its own oil shipments or those of regional allies such as Iraq and Qatar. The ongoing Iran-Israel conflict has not led to a blockade of the Strait of Hormuz, preventing any immediate impact on oil flows through the critical passage.
OPEC’s spare production capacity of 4 mbpd remains significantly higher than Iran’s current export volume, providing a supply buffer to absorb shocks. Additionally, US shale production continues to contribute to global supply resilience, despite declining rig counts.
US shale output has increased even as rig activity has reduced, and net US oil imports have declined consistently over the past decade. This shift has enabled global oil markets to withstand regional tensions that would previously have triggered sharp price spikes.
Demand-side projections have also moderated. Both the International Energy Agency (IEA) and the US Energy Information Administration (EIA) have revised their 2025 global oil demand growth forecasts. IEA now expects demand to increase by 0.72 mbpd and EIA projects 0.8 mbpd growth, down from earlier estimates of 1 mbpd. Factors influencing this revision include China’s slower post-COVID recovery, growing electric vehicle adoption, and fuel efficiency improvements.
On the export front, Iranian oil shipments—primarily routed to China—are continuing without major disruption. The report noted that unless there is a full blockade of the Strait of Hormuz or physical damage to Gulf energy infrastructure, Brent crude prices are unlikely to remain above USD 80 per barrel on a sustained basis.
The report concluded that while the geopolitical environment remains tense, current supply dynamics, including OPEC capacity and US shale resilience, are expected to keep oil prices relatively stable in the near term.
