Why The Iran Conflict Won’t Cause A Long-Term Spike In Oil Prices

This article written by Phil Rosen, co-founder and editor of Opening Bell Daily, was originally published on Inc.com.

The conflict in Iran is already pushing oil prices higher—but that doesn’t mean a drawn out supply shock is coming for markets.

Crude surged double digits in overnight trading, but the move looks more like a risk premium than evidence of missing barrels.

Unless exports, shipping lanes, or Gulf infrastructure takes a meaningful hit, this volatility spike isn’t likely to usher in a new US$100-a-barrel oil regime.

Markets are reacting to sudden conflict, not confirmed supply destruction.

Indeed, US crude prices’ fair value is estimated at $67 a barrel, according to Bloomberg Intelligence analysts.

For oil to hold above that level would require more than uncertain headlines.

“Despite geopolitical tension, global inventories remain robust on land and at sea, and the physical market is fairly well supplied,” said Bloomberg Intelligence energy analyst Salih Yilmaz.

That helps explain why the move, while sharp, does not yet resemble a classic supply shock.

Other indicators have not blown out in a way that signals inventory tightness, and the futures curve still implies muted pricing several months ahead.

The market’s baseline appears to be that as real as the escalation risk is, an enduring supply shock is a separate matter.

Without damage to export terminals or damage in the Strait of Hormuz, gravity tends to reassert itself in oil.

That pattern mirrors the broader market response to geopolitical shocks.

The S&P 500 has averaged a 14.2 percent return in the 12 months following major conflicts since 1950.

Investors — in oil and equities — are prone to quick recalibrations once it becomes clear that fundamentals have not materially changed.

For now, history suggests the surge in crude prices reflects caution and hedging rather than structural scarcity.

The smart money is betting the barrels keep flowing.

Pictured in the lead image is US President Donald Trump. Image courtesy Getty/Inc.