For decades, oil prices would typically shoot up the moment tensions flared in the Middle East, and understandably so. The region supplies about a third of the world’s crude. But in recent years, that link has started to fade.
Between 2015 and 2025, oil prices started reacting differently to conflicts. Situations that once caused big price jumps now have a smaller impact. Even serious events like the Israel-Gaza war or the Israel-Iran clash in June 2025 didn’t shake the market much. Prices mostly stayed between $70 and $90 per barrel.
Oil prices slipped on Wednesday, following a sharp 4 per cent surge in the previous session, as markets weighed the possibility of supply disruptions due to escalating tensions between Iran and Israel, and considered the likelihood of direct US involvement.
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As of 2:48 pm IST, Brent crude futures were down 93 cents, or 1.2 per cent, at $75.52 a barrel.
What’s driving this shift? A combination of more spare capacity in the system, softer demand (mainly out of countries such as China), and better tools for market tracking. All this has set the oil market into calmer waters, away from shock headline drives.
2015 to 2017: Conflict without consequence
In the mid-2010s, despite a backdrop of diplomatic spats and military escalations including the Saudi-Iran fallout and the Qatar blockade, crude oil prices remained subdued. Brent crude hovered around $50 per barrel in June 2017, underscoring the market’s overriding concern: oversupply.
Even severe incidents such as Saudi Arabia cutting diplomatic ties with Iran in 2016 only temporarily spiked volatility. With OPEC extending supply cuts and global inventories hovering near 3 billion barrels, the market shrugged off conflict risks.
2018 to 2022: Sanctions bite, pandemic dominates
A shift took place in 2018 with the US withdrawal from the Iran nuclear deal. Sanctions cut Iranian oil exports by 2.4 million barrels per day, pushing prices higher. Yet, this pattern didn’t hold. The COVID-19 pandemic in 2020 and 2021 collapsed global demand, sending oil prices crashing. Even as tensions continued in the region, pandemic-driven economic shifts dominated oil pricing.
By 2022, oil prices rebounded. Brent briefly neared $130 per barrel, but that rally was primarily linked to Russia’s invasion of Ukraine and Europe’s energy crunch, not Middle East instability.
2023 to 2025: Stability despite serious conflict
Since 2023, the disconnect between oil prices and Middle East conflict has become even clearer. The Israel-Gaza war and fresh Israel-Iran tensions in June 2025 sparked only short-term price bumps.
Brent crude averaged around $80 in 2024 and has hovered in the $70 to $85 range in 2025, despite headline-grabbing escalations. A brief jump to over $78 per barrel in June 2025 quickly settled back near $74.50 once it became clear that no actual barrels were lost.
As per a CSIS report, the market now prioritises physical disruptions over political noise.
Why prices are more grounded now
Several key factors are driving this tempered response:
Spare Capacity: OPEC+ maintains over 5 million barrels per day in spare capacity, creating a safety net.
China’s Slowing Demand: With reduced economic growth, China’s crude appetite has softened, easing upward pressure on prices.
Smarter Markets: Tools like satellite surveillance and tanker tracking mean traders no longer rely on speculation alone. After the 2019 Abqaiq attacks, prices returned to normal within weeks — a sharp contrast to the past.
Crude oil prices no longer move in lockstep with every Middle East headline. While the region still matters, today’s oil market is better stocked, better informed, and far less reactive — unless supply actually gets disrupted.
