In a scene that seems contrary to economic axioms, global oil prices fell despite the confrontation between Iran and Israel, which reached its climax in mid -June 2025 with the exchange of strikes on strategic locations in Natanz and Tel Aviv, and while the prices were expected to jump in these tensions, the markets showed a remarkable cold, as Brent crude futures fell by more than 3%, in a sign that basic factors are factors - Like the abundance of supplies, the absence of real damage to the oil infrastructure, and the infected global demand - was stronger than the noise of the cannons.
In this report, we analyze how oil exceeded the winds of war, and what prevents prices from igniting in the midst of a burning geopolitical crisis.
With Israel starting its raids on June 13th on Iranian facilities, such as Natan's nuclear facilities, Tehran responded by firing missiles at Tel Aviv and the northern regions in the middle of last week, oil contracts fell more than expected.
On Friday, June 13, Brent crude rose to about $ 74.2 a barrel, an increase of 7 percent from the closure of Thursday, but as tension declined on Monday, June 16th, the prices came back.
Futures recorded a decrease by more than 2 percent to about $ 71.6 a barrel at the end of Monday's session.
Double support
Rana Drail Energy, an expert on energy advisor, Shuaib Boutmin, believes that the market has received double support ... from the abundance of supply, and from OPEC's ability to intervene if necessary.
He added, "Brent crude prices have already increased from 68 to 74 dollars in a few days as a result of tension, or about 7 percent, but the fear of reaching $ 100 is exaggerated, because supplies via the Strait of Hormuz were not affected, and there is an abundance of supply, and OPEC reserves represent a real safety valve."
Therefore, the reasons that led to the decline in prices in light of the surrounding military escalation, mainly lies in the limited local damage, the continued flow of supplies and the movement of navigation, production reserves and compensation from OPEC+, the pressures of the global market and declining demand.
Local damage Ltd.
The first indicators indicate that the attacks did not target the strategic oil infrastructure in the two countries. Official Iranian oil companies have stated that refining and storage facilities operate normally and were not damaged by the strikes.
On the Israeli side, there was no statement that losses occurred in its oil installations in the wake of the missile responses. Analysts say that Israel was keen not to target the central Iranian island of Khark to export crude, which constitutes about 90 percent of Iranian oil exports.
"The impact of the recent Israeli strike was mainly targeting human heads of Iranian military leaders, which puts it in the category of long -term geopolitical and military targets, and not primarily economic", and this is in line with the clarification of the political nature of the attack and not targeting the oil structure.
In general, there was no direct blow to a major oil production or transportation facilities. This means in practice that the ability of the producing countries to resume production is completely available, and that fears of a break of supplies have not been achieved on the ground yet.
The continued flow of supplies and the movement of navigation
In addition to the lack of affected oil installations, the main supply lines continue to work regularly, so far no attempts to disrupt navigation in the Strait of Hormuz or other vital marine crossings have been recorded.
According to a Reuters report, it has not yet been targeted by production and export, and no efforts from Iran have been recorded to disrupt oil flows through the Strait of Hormuz.
Experts point out that the great Iranian exports that are more than two million barrels per day can be replaced by a relative easily. For example, the largest Iranian oil buyer is China, and its demand has begun to import alternative materials from the Gulf countries and Russia to compensate for any possible deficiency.
Khaled Al -Awadi also pointed out that "this is a proactive war that has political and geopolitical motives, and not a battle for oil ... but in the event of the threat to include the Strait of Hormuz or major oil facilities, there will be a completely different reaction from the markets."
Thus, oil shipments coming from the area remained stable. The oil fields in Iraq, Saudi Arabia, the Emirates, Kazakhstan and others continued to pump their full capacity, which compensates for any slight fluctuation in supplies.
Even the Israeli "Levithian" field of natural gas, which was partially damaged and later resumed during the crisis, is not a source of crude oil, but for gas, and therefore did not play a direct role in reducing the oil show.
Accordingly, it seems that the foundations of local influential did not contribute to a sudden global shortage of stock, which strengthened the price position in the markets.
Production and compensation reserves from OPEC+
This image enhances an important factor, which is a huge surplus energy at OPEC+. Iran's total production reaches about 3.3 million barrels per day, of which more than two million barrels are exported externally.
Experts believe that the excess production capacity of the OPEC+countries, including Saudi Arabia, Russia, Kuwait and the Emirates, is almost equal to Iran's current production.
This means that even if Iranian oil production and supplies are completely stopped, other countries are able to pump more crude to compensate for the deficiency.
One of the analysts explained that "OPEC's production capacity+ is sufficient to compensate for any disorder," and he went on, saying, "Unless one of the oil island (Khairk) is not yet a true story."
On the extent of OPEC+ to deal with any sudden supply disorders, Shuaib Boutmin sees that the organization is able to respond, but with a calculated balance that serves the interests of its members.
“OPEC has a significant production capacity, but it will not sink the market, especially if there is an opportunity for a close political solution. The organization has lost a market share and prices in the past months, so it may be inherited in increasing production, ”as he put it.
In his evaluation of the position of Algeria inside OPEC, Boutmin says that Algeria has always been one of the active countries in supporting cohesion within the group, adding, "Algeria is part of the eight group that initiated voluntary discounts, and is constantly seeking to maintain harmony within the organization, although some countries have not been committed recently, which affected the stability of the market."
In light of this, the supply reduction factor that would have raised prices was determined. Instead, OPEC+continued to increase production in June 2025 after agreeing on consecutive monthly increases, adding additional oil liquidity to the market, and according to the US Energy Information Administration, OPEC+countries extended the production raising program to go into July as well.
This means additional pressure towards the balance of supply or exhibition surpluses in the global market, and therefore, OPEC is the main pillar energy that keeps the market in harmony despite the tensions.
World market pressure and declining demand
Unlike the conflict, there are greater structural factors that play a role in price movements. The latest reports indicate that global oil stocks rise at a rapid pace this year, as a result of increasing global production and slowing demand.
Prices have been declining for four consecutive months due to the high global stocks and the decline in demand, in addition to canceling the "OPEC+" to a large part of the productive cuts that started in 2022.
The US Energy Information Administration expects to accelerate the increase in global stocks in 2025, as the average global stock will increase by 0.8 million barrels per day compared to previous estimates.
In other words, the global supply is expected to remain significantly exceeding the demand, which exerts additional decline on prices.
Despite some political tension, the markets are now weighing these developments, and in light of this general surplus of the offers, the Iranian -Israeli escalation has not been a sufficient reason for changing the image of supply and demand.
And based on the analyzes of the BMI Foundation, affiliated with the Fitch Solutions, the market is currently in a fragile balance between a limited military escalation and surplus in the global parade; Any real change in prices will be linked to the expansion of the conflict to include vital facilities or navigation roads such as Hormuz, oil prices are still under control, due to the surplus "OPEC+" ability, slow demand and high inventory reserves.
In the event that the conflict expands to affect oil facilities or the Strait of Hormuz, Boutamin is expected that the market reaction is strong, but it excludes this scenario as it does not serve major parties like the United States «If facilities or strait are targeted, OPEC's maximum capacity will be consumed quickly, and prices may take a sharp upward curve, but this is excluded because the American administration will not turn a blind eye to the rise of prices to levels Fictional, especially with high demand in summer.
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In conclusion, the decline in prices at this time is due to a set of overlapping factors, from the limited local damage that has not been disturbed by oil flows, the continued work of stations, platforms and the safety of the Strait of Hormuz, in addition to the abundance of reserve production capacity at OPEC+.
With the addition of the global supply surplus and the horizon of calm demand, the markets seemed less discomfort than the current clashes. The issue of the extent of future escalation remains out of control, such as a potential weapon to move prices; But currently, the weather indicators reflect a turbulent pattern of prices, from which a declining roar is issued in light of the relatively stable supply conditions.
** Oil futures are agreements to buy or sell oil on a later date, at a price that is determined today. Unlike the immediate price that reflects the price of the barrel "Now", the price of the future contract is affected by the market expectations for the future, such as the possibility of a crisis or surplus in the supply. Therefore, the future prices are sometimes higher or less than the immediate price, which is known as "Contrango" or "bacoyrich", according to expectations.
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