The expansion of the Middle East conflict and drone strikes in Yemen, as well as against a strategically important oil pipeline in Saudi Arabia, are reshaping risk assessments across energy markets. What had previously been seen as a short-term shock tied to war with Iran is now increasingly being treated as a scenario of prolonged supply disruption.
Reuters columnist Ron Bousso argues that the central question is no longer whether the market will react, but how long it can continue to function under current conditions. The Middle East remains a critical region for global energy production, and sustained disruption from the area is steadily eroding the market’s resilience.
Estimates suggest that if oil exports from Gulf countries were cut in half, the global market could still cover the shortfall for several months. But that capacity is limited. Before the war, the region accounted for about one-fifth of global oil supply, and export disruptions already seen have significantly reduced available buffers.
According to the International Energy Agency (IEA), global inventories have fallen by 507 million barrels since the start of the conflict, equivalent to about 2.8 million barrels a day. That means the market is still coping with the help of reserves, but that cushion is shrinking quickly.
Reuters says markets had long assumed Donald Trump would be able to end the conflict once rising gasoline prices and political costs became too high. But that scenario also depended on Tehran being willing to compromise, and there are still few signs of that.
Iran’s leadership views the conflict as a struggle for survival and, ahead of any possible negotiations, has an interest in intensifying economic pressure on the United States and the global economy. At the same time, Washington is tightening restrictions on Iranian oil exports, increasing the economic cost of a prolonged confrontation for Iran.
Actions by the Houthis and attacks on Saudi Arabian infrastructure could temporarily shift the balance in Tehran’s favor, Reuters notes. In Ron Bousso’s view, mounting pressure may eventually push the sides toward negotiations, but they may also continue fighting in an effort to secure new economic or military advantages.
Reuters sees the main risk in the possibility that the war could continue for many more months. In that case, fresh supply disruptions may occur at a moment when the market has little spare inventory left to offset another reduction in supply.
