In 2025, the global oil market faced multiple black swan events—including the Iran-Israel conflict and Ukrainian strikes on Russian refineries—yet remained largely unfazed. Even as the world grew more volatile, an era of energy abundance may have ushered in a new normal of calm.

By any measure, 2025 was a year of geopolitical upheaval, marked by former U.S. President Trump's return to the White House in January and his subsequent flurry of policy, trade, and diplomatic moves.

The energy market's pivotal moment came on June 12 when Israel bombed multiple military, government, and nuclear sites in Iran. Ten days later, the U.S. joined with "Operation Midnight Hammer," targeting hardened Iranian nuclear facilities.

Historically, a U.S. strike on Iran ranked among oil traders' worst-case scenarios, with expectations that Tehran would retaliate by blocking the Strait of Hormuz—a chokepoint for nearly 20% of global oil and gas shipments. Conventional wisdom suggested such events would send prices soaring above $100/barrel.

Though crude volatility (OVX) initially spiked to levels unseen since Russia's 2022 Ukraine invasion, the price reaction proved remarkably muted. Brent futures rose from $69/barrel on June 12 to a $78.85 peak a week later, only to retreat to pre-conflict levels by June 24 when a U.S.-brokered ceasefire took effect—never surpassing 2025's yearly high.

**The Numb Oil Market** Throughout 2025, oil futures traded in a relatively tight $60-$81 range (based on daily closes), with the January peak occurring just before OPEC's production hikes began. Notably, this range was narrower than 2024's.

For context, when Russia—the world's third-largest producer—massed troops near Ukraine in December 2021, oil traded near $70/barrel. By March 8, 2022, two weeks into the invasion, prices had skyrocketed to nearly $130, remaining elevated for nearly a year. The 2022 surge reflected fears that Western sanctions would cripple Russian exports—fears that ultimately proved overblown, perhaps explaining 2025's diminished price sensitivity.

In April, Ukrainian attacks on Russian refineries and export terminals barely moved oil prices despite spiking refining margins due to diesel shortage concerns. Similarly, October's U.S. sanctions on Rosneft and Lukoil (accounting for 5% of global output) triggered only brief, limited price gains.

**The Age of Abundance** The explanation for this calm is clear: unprecedented global oil and gas supply. Over the past decade, the U.S. emerged as the top producer and exporter of both crude and LNG, with September output hitting a record 13.84 million barrels/day thanks to Permian Basin and Gulf of Mexico growth.

OPEC+—including Russia and Kazakhstan—boosted production throughout 2025 after ending years of output cuts. Non-OPEC Americas (Argentina, Canada, Brazil, Guyana) also ramped up output. The IEA projects this surge will create a nearly 4 million barrel/day glut by 2026, potentially lasting into 2027, as technological advances allow producers to maintain or expand output even at current prices. OPEC+ has further signaled plans to accelerate capacity investments.

**Calm Before the Storm?** Yet complacency carries its own risks. As Oaktree Capital's Howard Marks famously observed, "Risk is highest when perceived to be lowest." OPEC could reverse its production increases, while renewed Iran-Israel tensions might escalate. But for energy markets to truly panic, physical supply disruptions would likely be required—in this era of plenty, geopolitical jitters alone no longer suffice.