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A structurally higher oil price would change the upstream calculus for the world’s energy giants.

This shift comes as the industry’s appetite for new oil and gas investment has been strengthening. Over the past year, oil companies have significantly increased spending on exploration worldwide - from West Africa and the eastern Mediterranean to Brazil and Southeast Asia.

That was a sharp break from the prior decade, when shareholder pressure and fears of a rapid demand decline driven by the energy transition reduced upstream investment. Today, companies – spurred by new outlooks suggesting fossil fuel demand won’t peak until next decade – are ​increasingly confident that more supply will be needed through ​the end of the decade.

Of course, exploration remains a high‑risk, high‑reward business requiring heavy upfront investment. Projects can also often take more than a decade to progress from the first drilling campaign to production.

Still, higher long-term prices would expand the pool of economically viable reserves worldwide. And, importantly, the spiking risk premium in the Middle East is likely to push more ​capital toward regions previously deemed more risky or marginal.

Venezuela offers a case in point. Its oil industry reopened to Western companies after the US deposed President Nicolas ​Maduro in January, yet investment in the country has remained tepid given political uncertainty and concerns over the sector’s dilapidated infrastructure.

In a more bullish price environment, however, Venezuela’s vast resources could suddenly appear more appealing – particularly if the relative geopolitical risk gap between Venezuela and the Gulf shrinks.