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FxPro says geopolitics adds $5 to $7 premium to Brent prices
Geopolitical tensions are adding an estimated 5 to 7 dollars per barrel in risk premiums to Brent crude, according to market analysis published by FxPro, as traders weigh conflict scenarios against persistent supply surpluses.
The firm notes that during periods of global political or economic turmoil, market sentiment often overrides fundamental supply and demand dynamics. Despite ongoing oversupply conditions in the oil market, geopolitical developments in the Middle East and Eastern Europe are currently shaping price expectations.
Supply surplus meets political risk
Over the past two years, global oil supply has consistently exceeded demand. The International Energy Agency estimates that global reserves expanded by a record 477 million barrels in 2025, equivalent to roughly 1.3 million barrels per day, driven by increased production in the United States, Brazil and OPEC+ countries. This surplus has contributed to a broader bear market in both Brent and WTI benchmarks.
However, negotiations between the United States and Iran, as well as between Russia and Ukraine, have emerged as key drivers of pricing. Market participants are assessing whether renewed instability in the Middle East or stalled peace talks in Eastern Europe could disrupt flows or intensify sanctions.
Shock scenario and market questions
FxPro highlights a potential shock scenario referenced by Bloomberg, in which Brent could surge to 108 dollars per barrel if Iran were to close the Strait of Hormuz. Tehran has reportedly launched military exercises in response to statements by Donald Trump, the 47th President of the United States, regarding political change in Iran. At the same time, tighter sanctions on Russia are prompting major buyers, including India, to seek alternative suppliers, increasing demand for non Russian crude.
Traders now face two central questions: whether Middle East tensions could trigger global economic disruption comparable to past oil crises, and whether the Russia Ukraine conflict may further complicate existing supply imbalances.
FxPro provides traders with access to commodities markets alongside Forex and other instruments, offering analytical tools designed to navigate volatility in energy markets.
We also reported that FxPro launches Invite a friend program adds direct cash reward.
This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.
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