Neil Atkinson, the former head of the IEA's oil division, discusses oil markets amid tensions in the Middle East.

Neil Atkinson, former head of the International Energy Agency's oil division, stated that the likelihood of Iran blockading the Strait of Hormuz is very low. He explained that such an action would be economically damaging for Iran, which relies heavily on oil exports, particularly to China, its largest trade partner. Atkinson also noted that Iran's relations with regional countries like Saudi Arabia and the UAE have been improving, making a blockade even less likely.

He further discussed that, barring a major supply shock, oil markets are currently characterized by tepid demand growth and ample supply from countries such as the U.S., Canada, and Brazil. Atkinson indicated that oil prices could decrease from recent geopolitical highs unless a significant disruption occurs. He warned, however, that a severe supply shock could sharply reduce oil demand growth if prices were to spike dramatically.

Iranian blockade on Strait of Hormuz would be 'economic suicide'

I think they're very, very low for various reasons. Number one, the U.S. 5th Fleet is not a million miles away in the region. And for Iran to blockade the strait in some way, shape or form will be economic suicide. It relies on oil exports. Its biggest customer, and indeed its only big customer, is China. And it has long-term supply ranges for China at advantageous prices, so the Chinese won't be very impressed. And, indeed, China is Iran's biggest trade partner overall. You also have the fact that prior to the outbreak of hostilities, Iran's relations with Saudi Arabia, the UAE, and one or two other countries in the region had been improving. So to take action which would block the Strait of Hormuz, which would affect not just Iran, but also Saudi Arabia, UAE, Iraq, Kuwait, Qatar, or left anybody out, I think that would be economically suicidal for Iran. And the U.S. is not going to let that happen, because if it did happen and prices did spike to the educated guesswork levels that Goldman Sachs have come up with, that is disastrous for the global economy, and that would not stand. And disastrous for President Trump specifically when inflation has been muted in part because of the lower oil price. So if we take that option off the table, the so-called sort of Trump card from Iran's perspective, what else could drive oil prices higher from here? What should investors be thinking about, worried about? Well, if there is no blockade and it is essentially business as usual, and that's what we have seen so far since the Israeli attacks on Iran, then the fundamentals of the world market remain the same. Demand is, growth is very tepid, partly because of the uncertainty caused by Trump's tariff policies. So, and on the other side of the balance, we have plenty of supply coming on stream during 2025 from the U.S., from Canada, from Brazil, from Guyana, from Argentina, and of course we have got the OPEC plus voluntary cuts being unwound. So we have got tepid demand growth, but plenty of supply, absent a massive supply shock, we should see oil prices come off from the geopolitical peak that we have seen in the last few days, and sort of, certainly for Brent, head back down into the, maybe the high 60s. Neil, the level that you mentioned for Goldman Sachs, if there was a prolonged conflict or any closure in terms of tanker traffic, $100 on Brent prices, that's the level we could spike to and beyond from. In terms of the global economy, it feels as though there have been multiple threats, and an oil shock would just come on top of everything else that we have been dealing with. What does that do in terms of the demand for oil, if we went from an oil shock story, how deeply would that dent demand? Oh, if we went to a $120, $150 a barrel world, and this really is educated guesswork, because we have never been in this situation before. We have had short-term problems with the Gulf War, the invasion of Iraq, and other examples, but if we were to do that, we would see oil demand growth come off even further. So it's not, it isn't difficult to see a situation where demand growth this year of about 800,000 barrels a day currently expected, could at least halve down to 300,000 or 400,000 barrels a day if oil became significantly more expensive.

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Kyiv

Ukraine Invasion

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Jerusalem

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Tehran

Iran Strikes

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