Global Tensions Keep Oil Prices Elevated, Spotlight on Supply Routes

Former U.S. Secretary of State John Kerry has warned that Europe's ongoing energy crisis represents a greater threat to the continent than any military operation, according to an op-ed reported by OilPrice.com. He stated that energy insecurity is a fatal "exposed flank in Europe’s rearmament," noting that energy price shocks over the past four years have shuttered factories, driven inflation, toppled governments, and forced €650 billion in spending to shield consumers. This persistent crisis, stemming from conflicts in Ukraine, the Red Sea, and now Iran, underscores sustained global demand for secure energy supplies.

In the Middle East, the key chokepoint for global oil flows remains constrained. Despite a slight increase in traffic, with fourteen commodity vessels transiting the Strait of Hormuz on Wednesday, Gulf oil exports are struggling to recover, OilPrice.com reported. Analytics firm Kpler stated that persistent maritime security risks, war risk insurance costs, and Iranian interdiction are the main barriers, with a crude backlog shifting between the Gulf and the Gulf of Oman. U.S. Energy Secretary Chris Wright said about 6.5 million barrels per day exited the Gulf with U.S. military escort over the past week.

The conflict has directly impacted major producers. Saudi Arabia's oil output remains well below pre-war levels after Iranian attacks and the Strait's closure disrupted exports, causing its oil sector to contract almost 25% in the second quarter, OilPrice.com reported. However, the Kingdom redirected crude via pipelines to the Red Sea, allowing it to collect higher prices on reduced volumes. This dynamic boosted Saudi oil revenue by 28% quarter-on-quarter, shrinking its budget deficit, as Brent crude traded near $90 per barrel on Thursday.

For Bakken operators and royalty owners, the continued geopolitical premium on global oil prices provides a supportive backdrop. The sustained closure risk at the Strait of Hormuz, through which one-fifth of the world's oil trade passed in 2025, and Europe's acute energy insecurity highlight the market value of stable, non-OPEC production. While Saudi Arabia manages to export at a premium, the global physical market remains tight, as evidenced by a supertanker being provisionally booked at nearly $500,000 a day to load Gulf crude for China.

The situation illustrates the fragile balance of global supply. With Europe facing a "long, cold winter" and Gulf exports hampered, demand for crude from secure basins like the Bakken is likely to remain firm. The high-price environment, with Brent up more than 47% this year, directly benefits North Dakota's oil economy, even as global tensions create volatility and underscore the strategic importance of domestic production.