Geopolitical Tensions and Oil Supply Disruptions: A Review of Implications for Procurement Costs and Supply Continuity

Between 2022 and 2024 the international oil market absorbed an unusually dense sequence of geopolitical shocks. The Russian invasion of Ukraine triggered the most extensive energy sanctions regime ever applied to a major supplier, including a European Union embargo and a G7 price cap on Russian seaborne crude and products. Attacks on commercial shipping in the Red Sea and the Gulf of Aden diverted tanker traffic around the Cape of Good Hope, direct confrontation between Israel and Iran revived concern over the Strait of Hormuz, United States sanctions on Venezuela were reimposed, a political dispute shut down a large part of Libyan output, and OPEC+ sustained voluntary production cuts. Yet benchmark crude prices remained comparatively stable. This apparent paradox raises a practical question for organisations that buy crude oil and refined products: if headline prices did not spike, where did the costs and risks of geopolitical tension actually fall?

This paper addresses that question through an integrative review of 275 sources spanning energy economics, sanctions research, maritime logistics, supply chain risk management and procurement practice, combining peer-reviewed studies with authoritative institutional evidence. The review examines how conflict, sanctions and trade restrictions affect four procurement outcomes: oil availability, supplier selection, contract pricing and delivery reliability. Evidence was coded thematically against these outcomes and compared iteratively to identify the mechanisms that connect geopolitical events to buyer costs and supply continuity.

The synthesis shows that the dominant effect of geopolitical tension in this period was a reallocation of trade flows rather than an outright shortage of crude. Availability tightened mainly for particular grades, products and delivery windows, and was cushioned by producer spare capacity and consumer stocks. Supplier selection became a compliance-intensive and policy-contingent decision, as sanctions split the market into compliant and parallel pools, expanded due diligence on ownership, vessels and documentation, and exposed buyers to abrupt policy reversals and to the technical cost of switching crude qualities. Contract pricing was driven less by benchmarks than by the components layered on top of them, namely grade differentials, freight, war risk insurance, payment frictions and compliance overhead, so that landed cost rose even when benchmark prices were stable. Delivery reliability deteriorated as rerouting, chokepoint exposure, port congestion, enforcement detentions and threats to energy infrastructure lengthened lead times and, more importantly, made them less predictable.

From this evidence the paper develops a conceptual model in which four groups of geopolitical drivers act through four transmission channels (physical availability, supplier pool reconfiguration, price and risk premia, and logistics and compliance frictions) to shape procurement cost and supply continuity, moderated by buyer capabilities in contract design, inventory buffers, supplier and route diversity, financial hedging and technical flexibility. The findings imply that procurement functions should measure performance on total landed cost and lead time variance rather than invoice price and average transit time, allocate geopolitical risk explicitly in contracts, and pair financial hedges with physical options such as stock and route flexibility. For policymakers, the results point to the value of stockholding, import diversification, clear sanctions guidance and attention to spillovers on third countries, particularly import-dependent developing economies. The review is limited by the recency of the events, the reliance on institutional evidence for the latest developments and the opacity of sanctioned trade, and it outlines an agenda for firm-level and empirical testing of the proposed model.