Brent crude oil prices exceeded $70 per barrel this week, driven primarily by concerns over a potential US military action against Iran. The geopolitical uncertainty has heightened market volatility and contributed to the recent price surge. However, analysts suggest that other factors, such as supply constraints and demand recovery, may also be influencing the rally.
While geopolitical risks remain a key driver, the sustainability of the current price levels is under scrutiny. Market participants are evaluating whether the risk premium embedded in oil prices reflects temporary tensions or a more persistent shift in the supply-demand balance.
**Why this matters**
Understanding the factors behind the oil price increase is crucial for policymakers and investors, as prolonged elevated prices can impact inflation, economic growth, and energy markets globally. Clarifying whether the price rise is due to short-term geopolitical events or longer-term market dynamics helps in making informed decisions.