By Ron Bousso, Reuters Open Interest Energy Columnist

I'm excited to announce that I'm now part of Reuters Open Interest (ROI), an essential new source for data-driven, expert commentary on market and economic trends. You can find ROI on the Reuters website, and you can follow us on LinkedIn and X.

It’s almost as if a war between Israel and Iran never happened, at least when it comes to the oil market. Prices rapidly recoiled this week as both sides of the conflict agreed to a ceasefire.

Brent crude prices dropped sharply on Monday following a well-telegraphed Iranian missile strike on Qatar in response to the U.S. bombardment of Iranian nuclear sites over the weekend. Today, at $68 a barrel, Brent prices are lower than on the eve of Israel’s surprise attack on June 13.

The past two weeks’ roller-coaster of events offer some important lesson for energy markets, which I’ll outline below.

As always, feel free to share your thoughts with me by emailing ron.bousso@thomsonreuters.com.

Graphics are provided by Reuters.

HORMUZ: The worst-case scenarios for energy markets in the conflict never materialized. Investors and traders were on high alert for any disruption to oil and gas flows out of the Middle East, particularly through the Strait of Hormuz, a chokepoint between Iran and Oman through which around 20% of global oil and gas demand flows.

But as I wrote earlier this week, these fears may have been overblown. Historically, disruptions in Middle East oil production and exports have tended to be short-lived and limited in scope. For example, when Iran targeted dozens of tankers during its war with Iraq in the 1980s, the United States responded by deploying the navy to protect convoys of oil tankers, and the risk was mitigated quickly.

MIDEAST RISK PREMIUM: More broadly, the contained move in oil prices during the Israel-Iran war highlights the increasing efficiency of energy markets and fundamental changes to global crude supply, suggesting that Middle East politics may no longer be the dominant force in oil markets they once were.

There are multiple potential explanations for the change in the perceived value of the Middle East risk premium. First, markets may simply be more rational than in the past given access to better news, data and technology. Another explanation is that producers in the region learned from previous conflicts and built alternative export routes and storage to limit the impact of any disruption in the Gulf.

But perhaps the most important reason for the world's diminishing concern over Mideast oil supply disruptions is the simple fact that a smaller percentage of the world’s energy supplies now comes from the Middle East, under 35% compared to around 50% in the 1970s.

IRANIAN SANCTIONS: A big question going forward is the future of Iran’s oil exports, which face extensive U.S. and European sanctions. Iranian exports reached 1.8 million barrels per day in May, before dropping to 1.3 million bpd so far in June, according to analytics firm Kpler.

U.S. President Donald Trump signalled in recent days that China, the main buyer of Iranian crude, can continue importing oil from Tehran, which he said will need the cash to rebuild itself after the war. It’s unclear how this fits with Trump’s simultaneous claim that he has not given up on his ‘maximum economic pressure’ campaign against Iran.

IS THIS IT? The biggest question is, how durable is this ceasefire? Questions remain about what the United States, Iran and Israel actually agreed to, and it remains to be seen how the war might change Iran’s regional and military strategy, particularly given the weakened state of its proxies like Hezbollah and Hamas. Could Israel revive its bombing campaign in Iran if it suspects Tehran is ramping up nuclear enrichment once again? This may very well just be the end of one chapter in a new stage of this decades-long conflict.

Away from the Middle East, ROI Asia Commodities Columnist Clyde Russell wrote that Asia's imports of crude oil rose in the first half of 2025 as a surge in June arrivals overcame a soft start in the early months of the year.

ROI Energy Transition Columnist Gavin Maguire had a look at how the rapid growth in the installation of batteries is upending power systems across the United States, with battery-deployed electricity volumes scaling new records nearly every month.

And, finally, in one of the more head-scratching events of the week, Shell said on Thursday that it has not bid for BP and is not actively considering such a move, following a Wall Street Journal report the prior day citing sources that Shell was in talks to acquire the struggling British energy firm. In its strongly worded statement, Shell added that it was bound by UK regulations, meaning its statement bans it from making a bid for BP for the next six months.

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