Are oil prices truly reflecting the geopolitical risks in the Red Sea?

Analysts at J.P. Morgan are estimating that currently there is no geopolitical risk premium in oil prices, despite all the attacks on the Red Sea:

• Shipping disruptions are “easily handled”
• rerouting tankers around the southern tip of Africa adds only $2 a barrel to oil prices
• Gulf Arab states rely extensively on overland pipelines

The Wall Street Journal (gated) followed up on this with snippets from other bank analysts:

• Lack of oil supply disruption: No major interruptions have occurred, and this “explains much of the sanguine response in the oil market,” wrote Caroline Baine, chief commodity strategist at
• Capital Economics says there have been no major interruptions to oil supply
• Macquarie says the Houthi attacks are about crating fear, not about inflicting significant damage to specific targets
• Deutsche Bank cite improved missile defenses in the region that may reduce the likelihood of damage to oil production facilities

Standard Chartered take a less optimistic view:

• traders have perhaps become too complacent … there is an increased risk of a more direct U.S.-Iran confrontation in any of several key areas across the Middle East and we think that the combination of [Brent below $80 a barrel] and low volatility does not adequately capture that risk.