October 3, 2024

The risk of an escalating war between Israel and Iran is testing the global market’s faith that crude oil prices would be insulated from a widening of hostilities across the Middle East.

For decades, conflicts in the oil-rich region frequently spooked oil markets and weighed on the economy. But now, Middle East military skirmishes are causing more shrugs than drastic price spikes — a welcome development for the Biden administration, which has faced political criticism from Republicans over fuel prices and is trying to contain the fallout from Iran’s launch of nearly 200 missiles into Israel on Tuesday.

Increased oil production from the United States, Brazil and other places in the past two decades has diversified the global fuel supply, which means oil markets rely less on Middle East shipments that Tehran could disrupt, energy and security analysts told POLITICO. That’s notwithstanding an upward jolt in oil prices Thursday after President Joe Biden publicly acknowledged that the fighting could spread to Iran’s oil facilities.

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