Oil Gains as Middle East, Russia Hostilities Imperil Flows

• Current oil prices reflect a geopolitical risk premium, with Houthi attacks on Saudi Arabia not yet seriously impacting production or refining.
• Energy security is shifting from just drilling to reliable delivery, favoring non-Middle East producers like the US and Americas.
• Long-term, the growth of electric vehicles and other alternatives, coupled with industry resilience, could lead to lower oil prices if conflicts stabilize.

The discussion highlights that current oil price gains are driven by geopolitical hostilities in the Middle East and Russia. However, the analyst suggests that if these conflicts were resolved, fundamental models point to much lower oil prices, as the industry has proven resilient and alternative energy sources are increasingly adopted.