Iranian oil industry facilities in Mahshahr, Khuzestan province, southern Iran.
Kavi Kazemi | Getty Images
Oil prices will remain under pressure for the rest of the year, with Brent crude likely to struggle to reach $80 in the foreseeable future.
Andy Libo
President, Lipow Oil Associates
“The market is unlikely to believe that Israel’s recent military actions will lead to an escalation that could affect oil supplies,” Citi analysts wrote in a note on Monday. Citi analysts cut their Brent crude oil price forecast by 4% over the next three years. US dollars to US$70/barrel.
The oil market is also facing oversupply issues. Andy Lipow, president of Lipow Oil Associates, said: “The oil market has returned to oversupply as a result of Israel’s deliberate efforts, and perhaps the encouragement of the United States, to prevent crude oil facilities from being targeted.”
He added that oil production has been increasing not only in major countries such as the United States, Canada and Brazil, but also in smaller countries such as Argentina and Senegal.
“Oil prices will remain under pressure for the remainder of the year, and Brent may struggle to reach $80 in the foreseeable future,” Lipow told CNBC via email.
MST Marquee energy analyst Saul Kavonic said risk premiums had fallen a few dollars due to the more limited nature of the strike, which included avoiding oil infrastructure, raising hopes of a de-escalation.
Oil prices year to date
Kavonik told CNBC that the focus will now be on whether Iran will counterattack in the coming weeks, which will cause risk premiums to rise again, noting that the overall trend is still towards escalation and the possibility of a new round of attacks remains high.
At Sunday’s cabinet meeting, Iranian President Masoud Pezeshkian stresses Iran’s right to respond to Israeli attacksbut insisted they were not seeking war.
“We do not seek war, but we will defend our country and the rights of our people. We will respond to aggression accordingly,” he said.
Vivek Dhar, head of mining and energy commodities research at Commonwealth Bank of Australia, said market attention will turn to Hamas-Israel and Israel-Hezbollah ceasefire talks that resumed over the weekend.
“While Israel has chosen a low-aggression response against Iran, we doubt that Israel and Iran’s proxies (namely Hamas and Hezbollah) can achieve a lasting ceasefire,” Dahl wrote in a report.
