By Sydney CaseyPublished On: June 17, 2025Categories: Daily Market News & Insights, Fuel Prices
Crude oil prices are trending to the bullish side this morning, up more than $0.90 per barrel, as heightened geopolitical tensions give rise to market volatility. Diesel and gasoline futures have also spiked by over 5 cents and 2 cents, respectively, following concerns of escalating conflict in the Middle East. The rally follows last night’s social media post from President Trump advising Iranian citizens to evacuate Tehran, and reports of U.S. military activity, including 30+ air refuelers deployed to Europe and the USS Nimitz rerouted to the region. Several nations have also urged personnel to leave Israel, signaling rising concern that a broader conflict could be imminent.
These developments build on an already volatile week. Last Friday saw one of the sharpest three-day crude oil price spikes in decades, driven by Israel-Iran tensions. While markets briefly softened after Iran signaled interest in de-escalation, uncertainty remains high. Adding to market jitters, a collision between two vessels near the Strait of Hormuz, which is one of the world’s most critical oil chokepoints, led to the evacuation of 24 crew members. Though not deemed security-related, the incident comes as maritime traffic in the region grows more cautious. Some shipowners are now avoiding the strait altogether.
Despite the turbulence, there has yet to be a major disruption to oil production or distribution. However, the combination of strained diplomatic signals, military movements, and tanker route disruptions is contributing to a growing geopolitical risk premium. According to Goldman Sachs, Brent could surpass $90/bbl if Iranian export infrastructure is impacted. Meanwhile, the broader oil market is facing mixed fundamentals as OPEC+ production rose modestly in May, Iran reached a seven-year high in output, and the IEA forecasts global supply growth led by non-OPEC+ producers, even as demand projections have been slightly revised downward due to weak U.S. and China performance in Q2.
Looking further ahead, the IEA forecasts global oil demand will peak at 105.6 Mbpd by 2029, despite China’s consumption expected to top out in 2027 due to EV adoption and alternative transport. In contrast, U.S. demand is set to remain strong, with lower gas prices and slower EV uptake prompting a 2030 forecast revision upward by 1.1 Mbpd. U.S. EV sales are now projected to reach just 20% of total sales by 2030, down from 55% previously. On the supply side, global capacity is expected to grow by over 5 Mbpd to 114.7 million by 2030, keeping markets well supplied. The IEA expects a 1.8 Mbpd supply increase in 2025 alone, outpacing demand growth of 720,000 bpd. However, geopolitical tensions, particularly between Israel and Iran, continue to pose risks to global oil security despite strong fundamentals.
What some may have missed yesterday was the announcement of a U.S.-U.K. trade deal, which was largely overlooked amidst the geopolitical headlines but may play a more prominent role in global economic sentiment in the weeks ahead.
This article is part of Daily Market News & Insights