Brent crude fell 3–4% as immediate fears of a US strike on Iran eased. However, McGuire cautioned that geopolitical risks remain elevated, particularly given Iran’s strategic position near the Strait of Hormuz, a route through which around a third of global crude shipments pass daily. Any escalation in the region could sharply disrupt supply and reintroduce a war premium into oil prices, he said.
Iran, the fourth-largest producer in OPEC, accounts for roughly 4% of global oil output. “If supply through the Gulf is impacted in any way, crude prices could spike dramatically, as history has shown during periods of conflict,” McGuire noted, adding that markets are currently in a “wait-and-see” mode.
Crude could trade in low-to-mid $50 range if Middle East tensions remain contained
Looking ahead to the first half of 2026, McGuire said crude could trade in the low-to-mid $50 range if Middle East tensions remain contained and no major geopolitical shocks emerge. Such levels would be supportive for consumers and importing economies. However, he stressed that geopolitics continues to be the biggest wildcard for energy markets.
On the supply side, Trump’s remarks about potentially unlocking Venezuela’s vast oil reserves could add to an already well-supplied market. Venezuela holds the world’s largest proven oil reserves, and increased output could put downward pressure on prices. “There is already excess capacity globally,” McGuire said, suggesting any meaningful rise in supply would favour lower prices, assuming demand remains steady.
OPEC+ has recently indicated that global oil supply and demand are expected to remain broadly balanced in 2026, with demand growth continuing into 2027. McGuire believes the producer group’s stance will largely depend on how geopolitical risks evolve, including developments in Iran, Venezuela and ongoing conflicts such as Russia–Ukraine.
“In the long term, global oil consumption is still rising year after year, driven by electricity demand and petrochemicals,” he said. “But in the near term, prices will be dictated less by fundamentals and more by geopolitics.”