Geopolitics has not disappeared from oil pricing; it has been absorbed by markets accustomed to ongoing risks. The Russia–Ukraine war, Gaza conflict, and rising Iran–US–Israel tensions are largely priced in, limiting sharp price swings unless escalation occurs. Familiarity, however, does not eliminate risk. Iran remains the key wildcard. If pressure on Tehran becomes existential, disruption of the Strait of Hormuz cannot be ruled out, and even limited action would have immediate consequences for global energy flows.
Russian Oil Faces Rising Pressure
U.S. sanctions enforcement on Russian oil is becoming increasingly targeted and effective, focusing less on producers and more on Russia’s largest buyers. Secondary sanctions are now aimed at China, India and Turkey, reshaping trade flows and narrowing Russia’s export options. India has already reduced purchases significantly to avoid exposure and align with U.S. policy. Turkey, despite its deep energy and trade ties with Russia, has also cut crude imports as pressure increases. China has absorbed more Russian oil, both seaborne and via pipeline, but this exposes Chinese state-owned companies to growing sanctions risk.
The cumulative effect is that Russian crude is being obstructed in multiple directions. Because oil, rather than gas, remains Russia’s primary source of export revenue, these constraints are particularly damaging. As access to key markets tightens and compliance risks rise, pressure on the Russian economy is set to intensify, with potential implications for Moscow’s broader strategic and geopolitical decisions.