economy

May 7, 2026

Hormuz and the end of the old oil order

The Middle East conflict makes clear that great-power politics now matter as much as OPEC quotas and output

Hormuz and the end of the old oil order

TL;DR

  • The global oil market is increasingly influenced by geopolitical risks, with tensions in the Middle East impacting prices and transit reliability.
  • The UAE's exit from OPEC signifies a strategic pivot towards production flexibility and direct access to Asian markets, moving away from traditional quota structures.
  • Market reactions, like Brent crude crossing $120, now price geopolitical risk, war-risk insurance, and potential transit disruptions alongside supply and demand.
  • Asian refiners are facing higher costs due to rerouting and extended voyage times, while producers are adapting to a market where route stability is not guaranteed.
  • Demand is shifting eastward, particularly to India, reshaping producer strategies to compete for long-term relevance in Asian markets.
  • Energy security for Asian importers is becoming more complex, tied to geopolitics, logistics, and financial infrastructure, beyond just securing supply.
  • The global oil system is fragmenting into multiple interconnected circuits, driven by factors like Russian crude redirection and US shale production, rather than revolving around a single center.
  • Policy responses are evolving to include strategic reserves, renewable energy, and maritime security as part of a broader resilience framework.

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