No matter the Israel-Iran truce, oil is plentiful

Even with the recent ceasefire between Israel and Iran, the world has more oil than it needs. The 12-day conflict, marked by intense attacks, raised fears of supply disruptions, especially in the Persian Gulf. Yet, the oil market remains calm, with Brent crude prices dropping below $70 a barrel. Why? Global oil supplies are abundant, and the fighting didn’t stop production.

The ceasefire, announced by President Trump, is shaky, with both sides trading accusations of violations. Israel claims Iran fired missiles, while Iran denies it. Despite this, oil keeps flowing. The Strait of Hormuz, a key shipping route, stayed open, and a wave of Persian Gulf crude is hitting an already oversupplied market. This surplus is likely to grow, especially after the summer demand peak fades.

Geopolitical tensions hurt business and tourism, slowing oil demand. Meanwhile, U.S. shale producers are hedging heavily, ready to ramp up if prices hit $65-$70 a barrel. History shows that after Middle East conflicts, like the Gulf Wars, oil production often surges. Today’s situation looks similar—prices may drop further in 2025 and beyond. The Israel-Iran conflict, ceasefire or not, hasn’t changed the reality: the world is awash in oil.