The fallout from war between the United States, Israel and Iran has dominated global oil markets. And not just because the Strait of Hormuz, which normally carries about 20% of global oil and gas, remains effectively closed to shipping traffic.

Deep uncertainty about how long the disruption will continue has added a persistent “risk premium” – an extra cost built into oil prices to account for the risk of disrupted supply.

Rising insurance costs, reduced ship traffic and longer transit routes avoiding the Middle East have all added further friction to global oil supply chains.

An optimist might say this will all be sorted out quickly and soon enough we will be back to “normal”. And oil prices have retreated back below US$100 per barrel this week, on renewed hopes of a peace deal.

But they’re still elevated. Before war broke out in the Middle East, benchmark oil prices had hovered in the range of US$70–80 a barrel since 2023. That’s near where they’ve sat, on average, in “normal” times for much of the past two decades.

But what if there is no way back to “normal”? What if the fundamental challenge now isn’t the short-term disruption in supply, but the realisation that the days of cheap oil may have come to an end?

Oil’s invisible reach

Higher oil prices have a ripple effect that typically starts at the fuel pump. Petrol, diesel and........

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