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The Fog of War, Fractures and Rifts: How Will the Energy Markets React?

  • Writer: Timothy Beggans
    Timothy Beggans
  • Nov 20, 2025
  • 2 min read
Source: Twitter (X)
Source: Twitter (X)

In recent weeks, a swirl of geopolitics—from Iran to China to Russia—is casting a growing shadow over global energy markets. These tensions aren’t just headlines; they’re potential inflection points for risk premiums, upstream disruptions, and price volatility.


Iran: Drought, Crackdowns & Tanker Seizures


Iran is grappling with a historic drought, rising internal unrest, and the seizure of a Marshall Islands–flagged oil tanker in the Strait of Hormuz. Because the Strait remains a critical chokepoint for global oil flows, any further escalation could pressure supply and push prices higher. At the same time, Iran’s domestic refining system remains fragile, increasing the risk of internal instability feeding external aggression. Risk premiums tied to the Middle East are likely to stay elevated.


China: Slowing Economy, Growing Belligerence


China’s factory activity has stumbled, with industrial output and retail sales slowing sharply. Deflationary pressure continues to weigh on its industrial sectors. Meanwhile, Beijing is escalating military pressure over Taiwan and sparring diplomatically with Japan. For energy markets, this creates a dual effect: weaker demand that could soften prices—but geopolitical risk that could sharply reprice supply expectations if tensions intensify.


Russia: Drones, Airspace Violations & Nuclear Signaling


Russia continues to escalate pressure on NATO with drone incursions and airspace violations, paired with renewed nuclear threats. These actions coincide with Ukrainian long-range strikes on Russian energy infrastructure. Markets are increasingly debating whether current prices fully reflect the risk of sustained Russian output disruption. A sudden power shift in Moscow—overthrow or assassination—could trigger dramatic price moves, from near-term bearish chaos to longer-term bullish restructuring, depending on the successor and sanctions posture.


Key Market Questions


• Is the market pricing in Russian supply losses from drone and missile strikes?


• Is a Chinese military move on Taiwan being priced in?


• What would an abrupt change in Russian leadership do to risk premiums?


• Which outcomes are bullish—and which are bearish?


Energy markets face a confluence of fractures. Volatility is set to rise as traders weigh political instability, supply threats, and the risk of miscalculation among major powers.


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