Oil market risks May be underestimated, says Vitol executive

Tuesday 02 June 2026 - 15:30

Global oil markets may be underestimating the potential risks stemming from ongoing geopolitical tensions in the Middle East, according to a senior executive at commodity trading giant Vitol.

Tom Baker, managing director for Bahrain at Vitol, warned that current oil prices may not fully reflect supply vulnerabilities linked to disruptions in the region. He noted that conflict-related tensions and instability in key transit routes have already had a significant impact on global energy flows.

One of the most critical concerns remains the Strait of Hormuz, a strategic maritime corridor through which a large share of the world’s oil supply is transported. Any disruption to this route, combined with attacks on energy infrastructure such as oilfields and refineries, could significantly tighten global supply conditions.

Baker emphasized that while crude oil production can often recover relatively quickly, refined products face greater logistical challenges. He suggested that supply chains for fuels such as gasoline and diesel may struggle to adjust for the remainder of the year if disruptions persist.

He also warned that markets may only fully react when physical shortages become more visible. At that point, price adjustments could be sharp, particularly if demand remains strong while inventories are drawn down.

Although oil prices have fluctuated in response to geopolitical developments, analysts note that markets often price in expectations rather than immediate physical constraints. However, in situations of prolonged instability, actual supply shortages can quickly shift market dynamics.

Baker added that sustained high prices would ultimately depend on demand destruction, where consumers and industries reduce consumption due to cost pressures. Until then, volatility is likely to remain a key feature of the global oil market.

The comments reflect broader concerns among energy market participants that geopolitical risk is not being fully incorporated into current pricing models, leaving markets vulnerable to sudden shocks.