Why did the Brent oil price not go to $200?

The reason oil prices didn't spike to crazy levels is because this shock just isn't that big

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The past several months have seen - again and again - prognostications that oil prices would go MUCH higher because of the war with Iran. I have to admit that I have scar tissue when it comes to this stuff. In the months after Russia invaded Ukraine back in 2022, I spent lots of time working on issues connected to the G7 oil price cap and - at the time - a major US investment bank came out with a forecast that Brent could go to $380 a barrel if the West pushed ahead with this. This kind of stuff does huge damage. Governments are naturally risk averse. No one wants to be responsible for driving oil prices into the stratosphere. In my opinion, these forecasts played a huge role in the West’s timid response to Russia and we know the result: four years on, Russia’s murderous war in Ukraine continues unabated.

The $380 forecast from 2022 became $200 in the current shock. What these extreme forecasts have in common is that they assume major shortfalls in supply that then require oil prices to rise sharply to “destroy” demand. As unfortunate as the war with Iran is, it is - from an economic perspective - a great “natural experiment” to see how global oil markets behave under duress. In yesterday’s post, I used South Korean data on oil import volumes to show that - while imports from Saudi Arabia were down 40 percent - overall imports were down only eight percent, which barely registers as a shock. South Korea avoided a bigger drop because it switched to import more oil from Canada, Malaysia and others. That’s a testament to the resilience of global oil markets and means that an extreme supply crunch, which would have necessitated a sharp rise in oil prices, never happened. Today’s post follows up with further data on the prices South Korea paid to keep oil imports running. It definitely “paid up” to keep supply going, but not egregiously so.

The left charts above repeat what I showed in yesterday’s post. They’re South Korea’s import volumes of crude oil and associated product in millions of barrels per month from all around the world (top) and Saudi Arabia (bottom). Global import volumes fell eight percent in April 2026 versus a year earlier, while they were down 40 percent for Saudi Arabia. The charts on the right show the price per barrel, which I’ve been able to back out because South Korea publishes both values (P*Q) and volumes (Q).

Now, the Harmonized System (HS) classification I’m using here is broader than just crude oil, so the backed-out price will be an average across crude, refined product, LNG and so forth. But it’ll give a rough idea of what was going on. The overall rise in price paid by South Korea was just shy of 20 percent in April 2026 from a year earlier. That’s less than the rise in the front-month Brent future (up 55 percent). South Korea did well. The price paid for Saudi oil rose 55 percent, so quite a bit more, but in line with the Brent futures price.

The charts above repeat the same format for Canada (top) and Malaysia (bottom). Imports from Canada were up 174 percent in April 2026 from a year earlier and the average price on that oil paid by South Korea was up 86 percent, i.e. more than the Brent front-month future. Import volumes from Malaysia were up 63 percent and the price paid by South Korea was up by 12 percent. In all cases, the rise in prices was at or below that in 2022 during COVID re-opening and the Ukraine invasion. Nothing about this screams huge supply disruption and thus little need for massive demand destruction. This - in the end - is why Brent didn’t go to $200 per barrel and is at the root of my post from back in March on why oil prices wouldn’t rise much further.