Rystad: Oil Prices To Remain Below $80 Despite Escalating Middle East Tensions

Abiola Olawale
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Oil prices are likely to remain capped below $80 per barrel despite the escalating Israel-Iran conflict, research firm Rystad Energy said on Monday, as Iran and Israel continue to trade strikes with the escalation now in its fourth day.

“Based on our earlier disruption simulations, we see oil prices capped below $80 per barrel,” Mukesh Sahdev, Rystad Energy’s Global Head of Commodities Markets – Oil, said in a market update, carried by Africa Oil+Gas Report.

The conflict appears likely to be contained and the United States could potentially play a central role, according to Sahdev.

The worst fear in the market is a potential closure of the Strait of Hormuz, the world’s most critical crude flow lane where more than 20 million barrels of crude pass every day—equal to a fifth of global daily oil consumption.

While disruption to Strait of Hormuz flows could be devastating and would send oil prices spiking and add further tensions, it is an unlikely scenario for many observers and analysts, including those at Rystad Energy.

“A blockade remains the key risk that could push markets into uncharted territory,” Janiv Shah, Rystad Energy’s Vice President, Commodities Markets – Oil, said.

However, “Given its interest in keeping prices closer to $50, the US could play a stabilizing role,” Shah added.

“We maintain our view that this is likely to remain a short-lived conflict, as further escalation risks spiraling beyond the control of key stakeholders,” Shan said.

Despite Israel and Iran hitting each other’s energy sites over the weekend, the targets are not material to global oil production or crude flows.

Following the oil price jump on Friday after the start of the Israeli strikes on Iran, oil was muted in early trading on Monday, with both benchmarks falling by around 1% and trading in the low $70s per barrel as key oil flows from the Middle East remain unaffected.

Source: Oilprice.com

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