Oil Prices Between Regional Conflict and the U.S. Presidential Election

This program is part of AGSIW’s U.S. Presidential Election series.

The geopolitical maelstrom that has been swirling in the Middle East since October 7, 2023 has had little impact on oil prices because there has been no significant disruption to supplies and demand has been tepid. However, the price of oil shot up after Iran launched a barrage of missiles against Israel October 1 and moved even higher in the days that followed in anticipation of Israel’s response. If Israel targets Iran’s energy infrastructure, it could remove a sizeable supply of oil from the market.  

What are the energy security implications of such a scenario, and what further measures should oil consuming countries take to ensure that the crisis caused by the war in Ukraine in 2022 is not repeated? Will it prompt import-dependent countries to beef up inventories, pushing prices even higher? Will it accelerate the energy transition away from fossil fuels? What impact would an oil supply and price shock have on the global economy? Can the market cope with the loss of an estimated 1.6 million barrels per day of Iranian crude oil? What are the long-term implications of the escalation in the Middle East on the oil and gas markets? With the U.S. presidential election just weeks away, would higher gasoline prices become a liability for the Democratic Party?  

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