Commodity Strategist: Oil Would Be in the $40s Without Iran War

"She points out that since oil peaked in March 2022, we've seen multiple rallies just like this one, each accompanied by the threat of supply disruption from geopolitical conflict. But in reality, very few barrels of oil were ever actually taken off the market. The pattern is consistent: fear spikes prices, supply holds steady, and the rally fades."

"Markets are pricing in disruption risk, but if history is the guide, the actual supply impact may be minimal. That makes the current price level a geopolitical premium sitting on top of a much softer fundamental floor."

"ExxonMobil already showed how sensitive earnings are to price moves. Full-year 2025 net income fell to $28.84 billion from $33.68 billion in 2024, despite record production of 4.7 million oil-equivalent barrels per day."

Carley Garner argues that current oil prices are inflated by geopolitical risk premiums rather than fundamental supply-demand factors. Historical patterns since March 2022 show repeated rallies driven by conflict threats that rarely result in actual supply disruptions. The Iran situation follows this same pattern, with markets pricing in disruption risk despite minimal actual barrels being removed from supply. Brent crude trades in the $69-$73 range while WTI sits around $66.36, but Garner suggests a softer fundamental baseline exists beneath these levels. If the geopolitical premium deflates, major integrated oil companies like ExxonMobil face significant earnings pressure, as demonstrated by 2025 net income declining despite record production.

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