Chart is for illustrative purposes only. Past performance does not guarantee future results. This information contains projections or other forward-looking statements regarding future events, targets or expectations, and is only current as of the date indicated. There is no assurance that such events or expectations will be achieved, and actual results may be significantly different from that shown here. The information in this presentation is based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons.
Historically, one consequence of geopolitical tensions in the Middle East has been higher oil prices. The recent conflict sparked concerns surrounding Iran’s oil supply and the impact it could have on oil prices and the current disinflation trend. However, after spiking briefly following Israel’s first strike on Iran on June 13, the price of oil has remained steady and is back to where it was before tensions intensified.
Why? In short, it’s likely due to the shale revolution that has transpired over the last decade or so, increasing U.S. oil production and reducing the world’s dependence on crude oil from the Middle East. From 2013 to 2024, growth in global oil demand was largely met by supply outside of the Organization of the Petroleum Exporting Countries (OPEC), an international organization of policy-setting oil-producing countries to which Iran belongs.1 The expectation for 2025 and 2026 is that supply from non-OPEC countries will continue meeting global demand for oil.2 Nevertheless, if Iran’s 1.6 million barrels per day of oil exports were no longer available, OPEC would still harbor excess capacity.3
It appears that the global oil market is not extremely exposed to affairs in the Middle East as it once was. Nonetheless, tail risks remain, underscoring the importance of a diversified approach in asset allocation.
1 Source: Energy Institute, IEA and BNY Wealth, as of June 2025.
2 Source: Energy Institute, IEA and BNY Wealth, as of June 2025.
3 Energy Aspects, an energy consulting firm, and the U.S. Government Energy Information Association.
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