Since the outbreak of the conflict in Gaza last October, spikes in oil prices have been short-lived as oil production has largely been undisrupted. However, this could change if Israeli strikes target Iranian energy infrastructure, including export terminals, oil and gas fields, power plants, and storage facilities.

“This option is unlikely to gain favor with the U.S. administration, which would be wary of disrupting oil markets in the weeks leading up to the presidential election,” Kaneva noted. “Still, until the conflict is resolved, we could see a sustained geopolitical premium in crude price.”

Another key difference is that global oil inventories are much lower today. Global crude inventories currently stand at 4.4 billion barrels — the lowest on record since January 2017 and markedly below last year’s levels, when Brent was trading at $92/bbl. Meanwhile, both OECD crude and liquids inventories sit below their five-year range and five-year averages, and oil stocks at Cushing are severely depleted by the standards of the last 15 years.

“Price is a function of demand for oil inventory, which in turn depends on the willingness of users to either deplete or restock their holdings. Given the anticipation of an oversupplied market in 2025, oil consumers have so far opted to wait, causing a dislocation of the oil price from its fair value,” Kaneva explained. “However, shifting dynamics in the Middle East might create a greater urgency to replenish inventories, thereby realigning the price of oil with its fundamental level.”