Oil’s Muted Response to the Iran Crisis: Markets Price in Geopolitical Risk, Not Disruption

In this timely commentary, Schroders economists George Brown and Malcolm Melville examine oil price behaviour amid the latest US-Iran tensions and assess implications for inflation and investor positioning.

• Brent crude briefly rose above $81 but quickly retreated, reflecting a well-supplied market and a 20% risk premium already priced into oil.

• Despite rhetoric, Iran is unlikely to block the Strait of Hormuz due to legal and geopolitical constraints—keeping near-term supply largely intact.

• Energy inflation risk remains muted; oil would need to surpass $100 per barrel to meaningfully impact broader CPI figures.

Explore the full report to understand the interplay between oil markets, geopolitical signaling, and inflation dynamics in today’s fragile macro environment.