Orkhan Rustamov, CEO of Alkagesta, observes that oil market analysts and traders frequently anticipate a normalisation that current conditions suggest will not materialise. The past six months have witnessed Brent Crude prices fluctuating between approximately $60 and nearly double that figure, marking a period of extreme volatility not seen since the COVID-19 pandemic. This contrasts sharply with the relative stability experienced in recent years.
Historically, oil prices have often settled between $50 and $80 per barrel, offering a predictable baseline despite occasional sharp movements. However, the expert analysis highlights that ongoing conflict in the Gulf region has directly affected global oil production, refining, and export operations. While the region is no stranger to conflict, the current situation represents an unprecedented, widespread disruption to the core of the oil industry.
Although a Memorandum of Understanding in June briefly lowered prices and allowed for increased Gulf production, subsequent escalations in rhetoric and conflict have severely curtailed shipping through the Strait of Hormuz. Traffic in July reportedly dropped by up to 90% compared to pre-conflict levels, averaging just 8-15 vessels daily in recent weeks.
While tensions may eventually subside, the underlying security and stability vital for predictable oil prices in the Gulf have been irrevocably altered. Nations and corporations managing essential oil and gas infrastructure now find themselves vulnerable to external events beyond their direct control.
In response, regional players are accelerating strategic infrastructure projects. The UAE is fast-tracking its Habshan-Fujairah pipeline, aiming for 2027 completion, to bypass the Strait of Hormuz with a 3.6 billion barrels per day capacity. DP World also intends to expand Fujairah port with two new container terminals. Similarly, Iraq's Development Road project, linking Basra's Grand Faw Port to Turkey via a 1,200km rail and road corridor, seeks to circumvent both Hormuz and the Suez Canal for Europeanbound oil.
These extensive projects, however, will not provide immediate relief. Instead, their rapid development underscores a collective recognition among major oil producers of the long-term implications of current geopolitical instability. The consensus is that the previous state of market 'normality' is no longer a viable expectation for traders, analysts, and operators in the global oil sector.
Sources
- European Business Magazine, “There is no 'normal' for the oil markets to return to”, 2026-08-06 — europeanbusinessmagazine.com
- Alkagesta — alkagesta.com
