Oil Prices Unlikely to Spike Again

Despite earlier predictions of an oil price spike to $200, markets have largely moved on from the apocalyptic forecasts. Robin J Brooks, a writer who pushed back against these predictions, argues that time is working in favor of lower oil prices. He points out that market psychology has shifted, with investors becoming skeptical of narratives suggesting oil prices will surge.

The reimposition of the US blockade on Iran's economy has also led to a devaluation spiral, with the Iranian Rial experiencing extreme economic dislocation. While some still predict an oil price spike, Brooks believes that Brent crude around $90-$100 adequately prices the disruption in the Strait of Hormuz.

Brooks cites three reasons why a return to earlier highs is unlikely: market psychology, narrative shift on Iran, and learning-by-doing on supply chains. He notes that as time passes, markets adapt to shocks and find ways to trade around them.