The fall of the Assad regime in Syria may have no direct impact on global oil markets, but its effects are uncertain and could lead to both bullish and bearish outcomes. Before the regime fell, there was concern that a worsening conflict between Israel, Hamas, Hezbollah, and Iran could spread violence and increase the risk of Iranian oil production being cut or reduced.
The market has already factored in a potential loss of 1 mb/d from Iran if sanctions are tightened under a new administration. However, recent increases in Iranian production have offset this prospect. Despite predictions that demand for OPEC oil will drop by 1 mb/d next year, reduced Iranian supplies could counteract most of that.
The overthrow of the Assad regime may lead to a more moderate government and weaken the Shi’ite axis, potentially emboldening the Trump administration to take a tougher stance against Iran. This could result in increased sanctions on Iranian oil exports, leading to higher prices for several months. However, such an agreement is unlikely to be reached without negotiations and tighter sanctions.
On the other hand, the fall of the Assad regime may weaken hardline factions within the Iranian government, making it easier for President Pezeshkian to reach a deal with the US. This could lead to reduced support for groups like Hamas and Hezbollah, potentially easing tensions and reducing prices in the long term.
The reaction of Putin’s Russia is also worth noting. With high losses on the Ukrainian front, he may be more willing to reach an agreement to halt fighting there. An increase in Russian oil production would likely push WTI prices down to around $60 or lower.
Against the backdrop of weak fundamentals, geopolitical influences will play a significant role in shaping the oil market next year. Fluctuations are expected as the year progresses.
Source: https://www.forbes.com/sites/michaellynch/2024/12/08/the-fall-of-the-assad-regime-could-unsettle-the-oil-market