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Oil Prices Unlikely to Fall, Even With Iran De-escalation: NAB

  //stocks-investing.news-articles.net/content/202 .. ly-to-fall-even-with-iran-de-escalation-nab.html
  Published in Stocks and Investing on Wednesday, March 25th 2026 at 16:26 GMT by Seeking Alpha
      Locales: IRAN (ISLAMIC REPUBLIC OF), UNITED STATES

Wednesday, March 25th, 2026 - Oil prices are unlikely to revert to the levels seen prior to recent geopolitical tensions and market shifts, even if the ongoing concerns surrounding Iran subside, according to a recent analysis by National Australia Bank (NAB) reported by Seeking Alpha. The assessment challenges the prevailing assumption that a de-escalation of conflict in the Middle East would automatically trigger a significant price correction. While geopolitical risk has undoubtedly played a role in recent price surges, NAB analysts argue that fundamental, structural changes within the oil market are now the dominant forces keeping prices high.

For months, the specter of a potential conflict involving Iran has loomed large over the oil market, adding a substantial 'risk premium' to crude oil prices. This premium reflects the market's anticipation of potential supply disruptions resulting from military action or heightened instability in the region. However, NAB's assessment suggests that even without a war, this premium won't translate into a return to prices around $65 per barrel - a figure many analysts considered a baseline prior to the current elevated levels.

The core of NAB's argument rests on three key pillars: increasing production costs, constrained refining capacity, and sustained global demand. On the supply side, extracting oil from increasingly challenging locations - deepwater drilling, shale formations, and mature fields - is inherently more expensive than in the past. Investment in these areas requires significant capital expenditure, and the return on investment is often lower, pushing the overall cost of production upwards. This means that even relatively efficient producers are facing higher breakeven points.

Furthermore, the global refining landscape is undergoing a period of significant constraint. Years of underinvestment, coupled with the permanent closure of several major refineries in the wake of the pandemic and a broader shift towards cleaner energy sources, have reduced the world's capacity to turn crude oil into usable products like gasoline, diesel, and jet fuel. This bottleneck effectively limits the supply of refined products, even if crude oil production were to increase.

Demand, despite some projections of decline due to the growth of electric vehicles and renewable energy, has proven surprisingly resilient. Global economic growth, particularly in developing nations, continues to drive demand for oil, especially in sectors like transportation, petrochemicals, and manufacturing. While the energy transition is underway, it's a gradual process, and oil will remain a critical component of the global energy mix for the foreseeable future.

The role of OPEC+ is also critical to understanding the current market dynamics. The organization's consistent production cuts have effectively managed supply, preventing a glut and supporting price levels. While OPEC+ has demonstrated a willingness to adjust production based on market conditions, analysts expect them to maintain a relatively conservative approach, prioritizing price stability over maximizing output. This deliberate constraint on supply, combined with the factors outlined above, creates a powerful upward pressure on prices.

NAB emphasizes that a resolution to the Iran situation - a diplomatic breakthrough or a de-escalation of tensions - wouldn't simply erase the existing geopolitical risk premium. Instead, it would likely lead to a reduction in that premium, but the underlying structural factors would continue to support prices at a significantly higher level than previously observed. The market may see a temporary dip, but a sustained return to $65/bbl is considered unlikely.

Looking ahead, analysts predict continued price volatility, driven by a combination of geopolitical events, economic fluctuations, and shifts in supply and demand. Investors and policymakers should focus not just on immediate crises, but also on the long-term trends shaping the oil market. The days of consistently low oil prices appear to be over, and businesses and consumers alike must prepare for a future where energy costs are likely to remain elevated.