Financier №3 (43) 2026

Until recently, analysts were expecting an oversupply in the oil market in 2026. How has the US–Iran military operation changed this outlook?

The supply–demand balance has shifted in the oil market due to geopolitical factors. However, many are already looking ahead to 2027 and anticipate a significant increase in production both within OPEC and outside the cartel, even as demand has structurally declined in some sectors. In my view, many underestimate the need to replenish inventories and likely overestimate the potential for boosting output in the Middle East.

OPEC+ continues to raise production quotas. Is this an effort to protect its market share, or are other factors shaping the strategy?

OPEC+ originally planned to lift quota restrictions gradually. This will allow the market to see which countries are truly capable of increasing production. A higher limit gives countries with spare capacity - such as Saudi Arabia - the ability to respond quickly during crisis periods, but only if the Strait of Hormuz remains open. Currently, virtually all spare capacity is located on the other side of the Strait.

How much actual available reserves does OPEC+ have left today?

That’s unclear, given the potential damage to production infrastructure. We’ll only be able to assess the true level of potential capacity once free navigation is fully restored and the ability to ramp up production is re‑established. However, we believe that capacity will be lower than before the crisis.

Has the oil market entered a period of structurally higher volatility, where geopolitics affects prices more than supply and demand factors?

Geopolitics has always played a key role in the oil market, but its influence intensifies during periods when the supply–demand balance is fragile. Oil remains a critical resource for the global economy, so any shortage of inventories inevitably affects prices.

China remains one of the biggest sources of uncertainty for the global oil market. What aspects of Chinese demand are most commonly misunderstood?

When people talk about oil demand, they usually mean gasoline and diesel. However, in China, around 25–30% of oil refining goes into petrochemical products. This demand is far less elastic than fuel demand. The drawdown of inventories in this segment over recent months has been an important factor in balancing the market.

Do Western policymakers fully grasp the macroeconomic risks associated with prolonged disruptions in energy markets?

Most certainly do understand these risks. Moreover, many are surprised that the consequences haven’t been more severe so far.

Some analysts argue that energy security has become more important than the climate agenda for many governments. Do you agree?

Yes. Governments are already adopting a more flexible approach to energy supply, using coal, gas, renewables, and liquid fuels. This crisis has also prompted several countries to explore the possibility of building strategic reserves - much like during the 1970s oil embargo.

Which geopolitical risk do you think energy markets are currently underestimating the most?

Markets are already pricing in a relatively comfortable balance for 2027, without fully recognizing what will need to be done to fully restore export flows and oil production in the Middle East. There is a considerable degree of complacency in the market.