LONDON — Energy sector executives and analysts have warned of prolonged price volatility in global oil and gas markets due to ongoing geopolitical tensions, particularly in the Middle East, industry representatives said on Friday.
The warnings come amid disruptions linked to conflict involving Iran, including restrictions on shipping through the Strait of Hormuz, which handles a significant portion of global oil and liquefied natural gas flows. Brent crude prices have fluctuated sharply in recent months, reflecting supply concerns and market uncertainty.
Major industry groups and companies have highlighted the potential for extended volatility as tensions persist. The International Energy Agency and World Bank have noted significant supply disruptions, with energy prices projected to rise substantially in 2026 compared to previous forecasts.
"Geopolitical risks remain a wild card," said Natasha Kaneva of J.P. Morgan Global Research in a recent outlook, underscoring how conflicts can fuel price swings beyond underlying supply and demand fundamentals.
The situation follows earlier escalations that led to curtailed production and shipping in the Gulf region. Analysts from organizations including S&P Global and Wood Mackenzie have described the events as among the largest supply disruptions in decades, with more than 11 million barrels per day of crude output affected at points during the tensions.
Oil prices have at times exceeded $100 per barrel this year before easing on hopes of de-escalation or diplomatic progress, according to market reports. However, executives have cautioned that any prolonged closure or restrictions at key chokepoints could sustain higher volatility.
The energy sector has responded with measures including releases from strategic reserves by consuming nations. The IEA coordinated one of its largest-ever emergency oil stock releases to help mitigate impacts.
Broader effects have included pressure on natural gas and related commodity markets, with spillover risks to global inflation and economic growth. Emerging markets and energy-importing regions face particular challenges from elevated costs.
Industry representatives have called for diversified supply sources and accelerated investment in alternative energy pathways to build resilience, though near-term adjustments remain limited. Details on specific new production timelines or policy responses continue to evolve as governments monitor the situation.
As of Friday, market participants reported continued monitoring of developments in the Middle East, with no immediate resolution to the underlying tensions reported. Energy firms have adjusted forecasts and hedging strategies accordingly, while emphasizing the need for caution in long-term planning amid the uncertainty.
