Crude oil futures were little moved by Iran's unprecedented attack on Israel, with traders believing the lackluster price movement meant the attack had been well forewarned and hopes the conflict would remain subdued in the aftermath. It is said that this is due to As Israel considers its response to the attack, market participants comment on the outlook:
$100 is possible — Citigroup
Citigroup's basic scenario is that tensions in the Middle East remain “extremely high,” supporting prices. In response, the central bank raised its short-term price forecast and raised its three-month target for West Texas Intermediate by $8 a barrel.
“In our view, what is not factored into the current market is the possibility of a continuation of direct conflict between Iran and Israel, which could push oil prices up to +$100 per barrel, depending on the nature of the situation. We estimate that a trade is likely,” analysts including Max Layton wrote in a note.
“Risk Premium” — Goldman Sachs
Analysts at Goldman Group Sachs, including Daan Strouben, said that before Iran's weekend attack, “oil prices were already reflecting a risk premium of $5 to $10 per barrel due to downside risks to supply. We estimate that the “Israel's potential response to an Iranian attack is highly uncertain and will likely determine the extent of the threat to regional oil supplies.”
Analysts say Iran's crude oil production has increased by more than 20% in the past two years to 3.4 million barrels a day, about 3.3% of global supply. As such, they said, “if markets estimate a higher probability that supplies from Iran will decline, this could contribute to an increase in the geopolitical risk premium.”
Further risks of direct military action — SocGen
Benjamin Hoff said: “We believe that, at least for now, the immediate risk of direct conflict has been contained. At the same time, the path to escalation involving the United States has increased, with the end of the risk distribution of events It's getting heavier,” he said. Global Head of Product Research at Societe Generale SA.
Since the Iranian attack, the risk of direct military action between the US and Iran has increased from 5% to 15%, and in such a scenario Brent prices would soar well above $140. He said he would. The bank raised its Brent price forecast by $10 over the forecast period, reflecting the possibility that the geopolitical risk premium may persist.
An uneasy calm — UOB
The outlook for oil remains highly uncertain, and if Iranian oil production is threatened, prices are likely to rise above $100 a barrel, United Overseas Bank said in a note. Still, there is also a risk that oil production by Saudi Arabia and the OPEC+ coalition will increase again, which could help stabilize energy markets, the central bank said.
Be aware of possible responses — ICG
“Iran is sending the signal, 'This is it, we're not going to do anything else,' but I don't know if not responding is an option for Israel,” said Dina, a London-based senior adviser for the Middle East. Esfandiary said. International Crisis Group. “The only thing that changes the situation is that the US has made it clear that it will not support Israeli retaliation. So this could constrain Tel Aviv to some extent.”
Maintain balance — SVB Energy
“The market should remain balanced if recent retaliatory attacks between Iran and Israel cease at current levels or refrain from escalating in the region without damaging oil production and export facilities.”SVB said Sara Vaksholi, founder and president of. Energy International LLC.
“Market fundamentals appear to be stable and OPEC+ is closely monitoring the expected increase in demand over the summer. If there is a shortage in the market, OPEC+ will consider reducing voluntary production cuts and increasing production. there is a possibility.”
“The price is already set” — ING Groep
“Markets were already pricing in some form of attack, but the limited damage and no loss of life suggests that Israel will “This means that we may need to take a cautious approach.”
“How Israel will respond is now a key uncertainty.”
Regarding oil, they said, “The primary risk is that oil sanctions against Iran will be more strictly enforced, which could result in the loss of oil supplies of 500,000 to 1 million barrels per day.” Ta. Other possible outcomes include Israel attacking Iran's energy infrastructure or Iran closing the Strait of Hormuz.
“To the Shadows” — RBC Capital Markets
The Israeli government's response to the Iranian attack will determine whether the situation leads to a broader war or reduces the risk of escalation, according to analysts at RBC Capital Markets, including Helima Croft. . Large-scale retaliation by Israel could trigger a cycle of instability, they said.
“Given Iran's seizure of ships in the Strait of Hormuz prior to the missile and drone attacks, we believe the risks to oil in such a scenario are not small,” the analysts said. Still, “if Israel backs down or takes minimal action, it seems very likely that Iran will use this opportunity to bring this war back into the shadows.”
“Increasing oil security risks” — IEA
According to the International Energy Agency, Iran's airstrikes against Israeli military facilities served as a reminder of the importance of oil security and increased the risk of oil market volatility.
The paper said in a newsletter that global oil markets were already tight before Iran's retaliation, and with geopolitical tensions in the Middle East further escalating, the focus is now on security of supply. Stated. Further developments will be closely followed, it added.
“Escalation is unlikely” — ANZ Banking Group
“The fact that the attack was so well publicized suggests that further escalation is unlikely,” said Daniel Hynes, senior product strategist at ANZ Banking Group. “There is no guarantee of further profits as prices are also rising.'' Until Israel's response to this attack becomes clear. ”
“The market needs to see further evidence that supply is at greater risk before pushing prices higher,” he added.
“A sigh of relief” — capital again
“At least for now, the oil market can breathe a sigh of relief,” said John Kilduff, founding partner at Again Capital.
“There was a lot of buying last week due to geopolitical tensions, but as the story unfolded, no real escalation of tensions occurred.”
“Harder sanctions” — A/S Global Risk Management
Arne Roman Rasmussen, head of research at A/S Global Risk Management, said: “The situation is fluid and if Israel shows that it will not retaliate, market tensions will ease.” . He said the worst-case scenario for the market is the closure of the Strait of Hormuz, but that outcome is unlikely.
Instead, he said, “sanctions against Iran are likely to be strengthened.” “The US-led sanctions against Iran are already very comprehensive, but Iran was able to expand production and exports last year as well.”