Outlook for energy markets, Iran and Venezuela

Key takeaways:

• The energy transition has moved into a more pragmatic phase, with a calmer tone after years of rapid expansion.

• AI can help optimise existing assets and lift output, but policy and regulation must enable efficient deployment at scale.

• Iran carries more weight than Venezuela in oil markets because its production volumes are higher, even after decades of sanctions.

• China plays a major role in keeping Iranian barrels flowing by buying a large share of Iran’s exports.

• The biggest oil market risk sits around the Strait of Hormuz, where any disruption could affect global oil trade quickly.

• Disruption probabilities are hard to judge because Iran’s position has shifted since two years ago, with proxies weaker and direct American attacks in 2025.

• Scenarios range from mild outcomes to extreme tail risks, including regime change and a potential escalation around Hormuz, with implications for how OPEC plus could respond.

• Venezuela’s core issue is whether reforms can shift oil from a resource curse to a blessing for people and the economy, even if leadership changes.

• Oil price spikes are often shorter lived than in earlier decades, as demand growth is slower relative to supply growth, which can limit sustained surges.