Trumponomics Why Oil Prices Are Decoupling From Geopolitical Threats
Jun 18, 2025
Jennifer Welch, a chief geoeconomics analyst for Bloomberg Economics, and Ziad Daoud, chief emerging markets economist at Harvard Kennedy School, explore the surprising stability of oil prices amid rising geopolitical tensions, particularly between Israel and Iran. They discuss how Trump's foreign policy and the decoupling of oil prices from traditional threats challenge the usual economic forecasts. The conversation highlights the complexities of the oil market, examining the factors that contribute to this unexpected resilience.
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Oil Price Decoupling from Conflict
- Oil prices have only modestly increased despite escalating conflict between Israel and Iran.
- This reflects a decoupling of geopolitical tensions from oil price spikes seen historically.
Why Oil Prices Are Less Sensitive
- Oil markets are less sensitive to geopolitical risk due to higher global oil storage and diversified energy sources.
- Economies have reduced oil intensity, lessening oil price impact on growth and inflation.
Trump as Ultimate Decider
- Donald Trump remains the ultimate decision-maker with a "team of rivals" dynamic in his administration.
- Loyalty shapes policy, with Trump weighing diverse options before making his own decisions.