Mounting tensions in the Middle East spiked further over the weekend with Iranian air attacks on Israeli military facilities, raising the risk of increased volatility in oil markets and providing a fresh reminder of the importance of oil security.

Global oil markets were already tight before the weekend’s events, with the deepening geopolitical tensions in the Middle East focusing attention on security of supply. 

The Brent international oil price benchmark breached the threshold of $90 a barrel earlier this month, reaching its highest level since October 2023 amid the heightened tensions between Israel and Iran.

The sustained output curbs by OPEC+ mean that non-OPEC+ producers, led by the Americas, are expected to continue driving world oil supply growth through 2025. Additional volumes from the United States, Brazil, Guyana and Canada alone could come close to meeting world oil demand growth for this year and next.

At the same time, global oil demand growth is currently in the midst of a slowdown. It’s expected to ease to 1.2 million barrels a day this year and 1.1 million barrels per day in 2025 – bringing a peak in consumption by the end of this decade into view.

With the strong recovery in demand following the disruptions of the Covid-19 pandemic having largely run its course, structural factors are set to lead to a gradual easing of oil demand growth over the rest of this decade. These include continued market share gains by EVs, steady improvements in the fuel economy of vehicles, and efforts in the Middle East to reduce the use of oil for power generation.