Oxford Economics (OE) withdrew its previous forecast that geopolitical risks surrounding the United States and Iran would gradually dissipate, according to a report released on the 15th (local time). The institution stated that temporary tension-reduction measures agreed upon by both countries quickly became ineffective, and critical disagreements over the Hormuz Strait remain unresolved. OE explained that the rapid collapse of the agreement starkly demonstrates the magnitude of differences between the two sides, lowering the likelihood of reaching a sustainable agreement in the short term. The revision reflects escalating US-Iran military confrontations and their impact on global oil markets.
Oxford Economics Revises Geopolitical Risk Forecast
Oxford Economics stated in its report that "the temporary détente measures agreed upon by both countries quickly became ineffective, and important disagreements surrounding the Hormuz Strait remain unresolved." The institution noted that "the rapid collapse of the agreement starkly demonstrates how significant the differences are between both sides," adding that this "lowers the likelihood of reaching a sustainable agreement in the short term."
OE explained that it had assumed in its July baseline scenario a gradual and relatively steady normalization of maritime cargo volumes with geopolitical risk premiums progressively dissipating. The institution now anticipates "a much more uneven recovery process with cyclical repetitions of cargo volume recovery, recurring logistics disruptions, and oil price rebounds."
OE Predicts Uneven Recovery with Oil Price Volatility
Oxford Economics forecasted that "oil prices will maintain high volatility rather than steadily declining with cargo volume normalization." The institution predicted that "intermittent conflict escalations could push the average Brent crude price above $80 per barrel over the next several quarters."
Brent crude September futures closed at $84.95 overnight, up 0.26% from the previous session.
Trump Considers Expanded Military Operations Near Hormuz
Recent military exchanges between the United States and Iran are trending toward escalation. US media outlet Axios reported that President Donald Trump is reviewing plans to significantly expand the scope of military operations currently underway near the Hormuz Strait.
US forces have been bombing the Hormuz Strait area and southern Iranian coast for five days. Trump convened key aides in the White House Situation Room, where new strike operations targeting strategic objectives were reportedly discussed.
FAQ
What did Oxford Economics revise in its US-Iran forecast?
Oxford Economics withdrew its previous forecast of gradual geopolitical risk dissipation between the United States and Iran. The institution stated on the 15th (local time) that temporary tension-reduction measures quickly became ineffective and critical disagreements over the Hormuz Strait remain unresolved, leading to a revised outlook of uneven recovery with recurring disruptions.
How does Oxford Economics predict oil prices will behave?
Oxford Economics forecasted that oil prices will maintain high volatility rather than steadily declining. The institution predicted that intermittent conflict escalations could push the average Brent crude price above $80 per barrel over the next several quarters, departing from its earlier assumption of gradual normalization.
What military actions are the United States taking near the Hormuz Strait?
US forces have been bombing the Hormuz Strait area and southern Iranian coast for five days. President Donald Trump is reviewing plans to significantly expand the scope of military operations currently underway near the Hormuz Strait, according to US media outlet Axios, with new strike operations targeting strategic objectives reportedly discussed in the White House Situation Room.
