Analysts expect oil prices to continue rising in the coming days as conflicts intensify in the Middle East and assess the impact on oil supplies, particularly through the Strait of Hormuz, through which more than 20% of the world’s oil flows.
Crude oil futures soared more than 8% on Monday, their highest in months, in the first trade after the United States and Israel launched an attack on Iran that killed Iranian Supreme Leader Ali Khamenei and Tehran hit back against Israel and at least seven other countries.
The attack damaged a tanker and forced many shipowners, oil majors and trading companies to halt shipments of crude oil, fuel and liquefied natural gas through the Strait of Hormuz.
*Citi analysts said in a note that they expect North Sea Brent to remain between $80 and $90 per barrel for at least the next week in their base case. The bank expects prices to return to $70 per barrel once the escalation eases.
*Goldman Sachs estimates the real-time risk premium for oil prices to be $18 per barrel, the bank said in a note on Sunday. If only 50% of flows through the Strait of Hormuz were stopped for a month, we expect this estimated impact to be mitigated to a $4 premium.
“However, oil prices could rise even more significantly if markets demand a premium for the risk of more permanent supply disruptions,” Goldman Sachs analysts said in a note.
* Wood Mackenzie said oil prices could rise above $100 a barrel if tanker traffic through the Straits is not quickly restored.
* “This disruption would create a double supply shock. Not only would current exports through the strait be halted, but additional OPEC+ volumes, and ultimately most of OPEC’s spare production capacity (typically a key lever for balancing global oil markets), would be inaccessible if the waterway remains closed,” WoodMac analysts said in a note.
*OPEC+ agreed to increase production by 206,000 barrels per day in April.
* Analysts at Société Générale said on Monday that the most likely scenario for oil prices is a short-term surge followed by a partial recovery as the market deems supply continuity reliable. (Reporting by Kavya Balaraman; Additional reporting by Ishaan Arora; Editing by Sonali Paul)
