2 March 2026
If you are covering the rise in the oil price following the escalation of conflict in the Middle East, please find below a comment from Maurizio Carulli, global energy analyst at Quilter Cheviot:
“Oil supply and demand fundamentals until Friday had pointed at a surplus in 2026, however, that is quickly changing as events in the Middle East play out. Recent weeks had seen the oil price rise from $60/bbl at the beginning of January to $72/bbl on Friday, with it climbing further today to $80/bbl as markets factor in the increased geopolitical risk.
“Depending on how, and for how long, the current military action will continue, the oil price will adjust quite quickly. So, if the situation will calm down over the next few weeks, as it is well possible, the price is likely to revert to $60-65/bbl, given oil production is in excess of demand, and Opec+ has some spare capacity to increase production further. And, vice versa, if the situation precipitates into a wide-spread and prolonged Middle East war, with shipping across the Strait of Hormuz halted, then the oil price could feasibly rise to $100/bbl and above.
“In modern history the Strait of Hormuz has never been actually closed, albeit temporary slowing of traffic has occurred. About 20% of global oil supply transits through the Strait of Hormuz and 38% of seaborne crude oil trade, with an average of 125 oil tankers per day. Until the military situation de-escalates, oil shipping companies will choose to anchor their vessels due to the risk of ship damage and/or seizures, as well as temporary unavailability of insurance cover. Satellite data shows that oil tanker transit had virtually halted over the weekend, a precautionary measure by shipping companies.
“For investors, it is crucial to remember that short-term changes in the oil price do not significantly effect the cash-flows of energy companies and do not significantly effect macroeconomic indicators either. There needs to be at least a month or two of a substantially different level of oil price to have a meaningful impact on quarterly indicators both at a company and at a macroeconomic level. It is the average oil price over a given period of time which matters, not the single discrete datapoints.
“As a rather gross rule of thumb, a $10/bbl change in the oil price, sustained over time, causes an increase/decrease in cash flow from the operations of an integrated energy company by about 5-10%, and of an exploration and production company by 10-15%. At a macroeconomic level, approximately, it can determine a 30-40 basis points increase in consumer inflation indexes. It can also shave off 10-30 basis points from global GDP growth, but again only if the oil price increase is prolonged in time.
“Of course, for companies that have producing assets in the Gulf, the positive impact is lessened by the potentially decreased export capacity from the region. ExxonMobil has about 20% of its oil and gas production in the region, TotalEnergies 19%, Shell 13%, BP 8%, Chevron 4%, ConocoPhillips 3%. It is worth noticing that in the very near term, exploration and production companies will outperform, given that they benefit more than integrated oil companies of higher oil prices, but again the gain can revert quite quickly when oil price goes in the opposite direction, making this a difficult market for investors to navigate.”
