Oil Price Forecast: Why the Worst Supply Fears Never Materialised

WTI crude traded at $82.08 on Friday, extending a rally that has lifted prices by nearly 20% from the $68 level earlier this month. Natixis analysts said the move reflected a repricing of geopolitical risk, not a tightening of physical supply. The worst-case fears surrounding Middle East disruptions have not materialised, they wrote in a note. Geopolitical risks remain elevated. The analysts pointed to the absence of any significant production or transport losses from the region. Without a supply shock, the rally may be driven by a risk premium that could unwind if tensions ease. The next trigger for a reversal could be a diplomatic breakthrough or a ceasefire, though no such event is imminent. For now, the premium sits in the price, and the physical market remains well supplied. The analysts said the absence of a supply loss leaves oil vulnerable to a sharp pullback if the risk premium erodes.