Oil prices might rise to $150 per barrel if fresh hostilities between the US and Iran intensify further as tensions continue to disrupt supply flows throughout the Gulf area.
The Oslo-based firm cautioned that the most recent escalation has already forced the April ceasefire into its most vulnerable phase, with crude benchmarks increasing quickly and global financial markets, especially US equities are under pressure.
Jorge Leon, senior vice president and head of geopolitical analysis, Rystad Energy, said “At this stage, it is too early to say whether the current escalation marks a full resumption of hostilities or a dangerous but still containable episode.”
He mentioned that increased volatility and uncertainty over the course of the conflict were reflected in Brent crude’s brief rise to about $94.5 per barrel before declining back to $93.
Leon stated that record releases from the Strategic Petroleum Reserve, decreased imports from China, and ongoing crude flows that bypass the Strait of Hormuz via Saudi Arabia’s Yanbu port may all contribute to mitigate the immediate effects of the supply disruption.
It is evident that the likelihood of a short-term agreement has decreased from our previous estimate of about 40 per cent a few weeks ago. The next few days will be crucial in determining if diplomacy can reestablish itself or whether the situation enters a more prolonged cycle of escalation. The direction of travel is now more unknown, he said.
Furthermore, the report pointed out that there has been a disruption of around 11.8 million barrels per day of production across six Gulf companies, which it termed as one of the worst supply shocks in the modern oil age.
Almost one billion barrels of total oil supplies have been taken out of international markets over the last three months, raising concerns about prolonged volatility until a more definitive geopolitical solution is established, it added.
