Oil prices unlikely to climb to extreme levels again: Expert

PARIS, 30 SEPTEMBER 2026 —

MUSCAT, Sept 29 — Oil prices are unlikely to climb to extreme levels again, according to Manpreet Gill, Chief Investment Officer for Africa, Middle East and Europe at Standard Chartered, who argued that sufficient incentives exist across all geopolitical sides to avoid such an outcome.

The expert noted that understanding market movements, particularly the divergent reactions of different commodities to the same global developments, can be puzzling even for seasoned analysts. It is often difficult to grasp why two commodities react differently, or sometimes in opposite directions, to identical macroeconomic events. Gill explained that when crude prices rise above $100, significant concern arises among investors and policymakers.

In this environment, even a minor piece of positive news is sufficient to push prices down, indicating a market that is sensitive to any signal of de-escalation or supply stability.

Gill anticipates that oil will remain around the $100 mark for some time. He suggested that positive news and ongoing diplomatic talks could potentially pull prices slightly lower, while less favorable developments might briefly push them above that threshold. However, he stressed that the market is currently in a middle ground where the worst-case scenario is avoided due to shared economic incentives, yet positive catalysts remain insufficient to drive prices down toward pre-war levels.

The current pricing reflects a balance between geopolitical risk premiums and the underlying fundamentals of supply and demand.

Regarding a potential return to pre-war price levels of $60 to $70 per barrel, Gill stated that a resolution to the conflict is required. He explained that over the long term, $70 per barrel remains the ideal benchmark for balanced economics, as dips below that level carry their own set of challenges for producers and consumers alike.

While short-term prices may continue to hover around $100, the 12-month outlook suggests a shift toward the $70 range, reflecting broader supply and demand dynamics as the geopolitical situation evolves. This trajectory assumes that supply disruptions do not become permanent and that demand growth remains in line with historical trends.

The Russia-Ukraine conflict impacts not only crude oil but also refined products like diesel and jet fuel, where supply remains constrained for distinct reasons. Gill noted that the market finds itself in an intermediate zone, well above desired low levels yet far below the extreme price shocks of $200 per barrel that were feared during the initial escalation.

This pricing environment helps keep inflation around 3%, a level that is manageable for central banks and economies. The distinction between crude and refined products is, as the constraints on refined products are often more immediate and localized than those on crude oil.

Gill also highlighted the difference between crude oil and natural gas in their impact on global economies. While crude directly influences the global economy, the United States, and emerging markets, natural gas holds greater weight for Europe and its inflation metrics. This divergence leads to varied market outcomes across different regions. However, financial markets ultimately focus on pricing future expectations.

Consequently, most markets would welcome the reopening of key transit routes like the Strait of Hormuz, which would alleviate supply concerns and potentially lower prices across the board.

On whether the El Niño effect drives broader energy demand, Gill said that there is little evidence of a major shift in total consumption. While extreme weather increases demand in certain areas, offsetting factors such as structural energy efficiency and the rapid expansion of renewables, particularly in Europe, help counterbalance the impact. He noted that while El Niño shifts the energy mix, its broader economic effect is typically muted compared to initial fears.

Its most noticeable impact occurs in specific agricultural commodities depending on crop types and locations, making it an inflation variable to monitor rather than a central risk for energy markets.

Discussing the transition toward electric vehicles, solar energy, and renewables, Gill said that high oil prices naturally accelerate this shift by making renewable projects far more economically viable. However, he emphasized that the transition was already gaining momentum before recent price spikes, largely driven by Paris Agreement commitments. The primary challenge moving forward rests on the execution capacity of individual regions to implement these projects quickly enough.

The availability of capital and infrastructure remains a key determinant of how fast the energy transition can proceed, regardless of oil price levels.

Turning to precious metals, Gill noted that gold traditionally serves as a safe-haven asset during geopolitical crises. However, the strongest structural driver over recent years has been emerging market central banks diversifying their reserves into gold. While the current conflict influences sentiment, higher inflation often raises bond yields, which can temporarily restrain gold gains. Nevertheless, as long as central bank purchasing continues alongside persistent demand for a supply-constrained metal, gold retains an upward trajectory.

Gill suggested that gold has the potential to reach $5,000 over a 6- to 12-month period, driven by these structural factors rather than just short-term geopolitical shocks.

The expert concluded that access to open energy supply lines remains a far more decisive driver for the markets than weather patterns or short-term demand fluctuations. The stability of the global economy depends on the ability to maintain these supply lines and manage the transition to a more sustainable energy mix. As markets continue to price in future expectations, the focus will remain on geopolitical developments and the pace of the energy transition.

Gill’s analysis underscores the importance of monitoring both geopolitical risks and structural changes in the energy sector to understand future market movements.

In summary, while oil prices are expected to remain elevated in the short term, the long-term outlook points toward a normalization of prices as geopolitical tensions ease and supply stabilizes. The transition to renewables and the diversification of central bank reserves into gold are key trends that will shape the future of global markets. Investors and policymakers alike must navigate these complex dynamics to manage risks and capitalize on opportunities in an evolving global landscape.

The insights provided by Gill offer a comprehensive view of the current market environment and the factors that will drive future price movements.