Oil Strengthens, Brent Could Reach US$100
Oil prices are again being boosted by rising geopolitical risks after the escalation of conflict in the Middle East continues to pressure supply flows. Analysts believe that disruptions to oil flows by Iran have reopened the possibility of a more extreme price increase scenario if the conflict continues.
TD Securities stated that trend-based market players (CTAs) are starting to become moderate buyers of Brent oil again as prices move above US$93 per barrel. However, high volatility remains a major obstacle to entering more aggressive long positions.
The United States military has conducted its 11th consecutive day of attacks against Iran. The attacks aim to weaken Iran's ability to threaten commercial shipping in the Strait of Hormuz, although the US Central Command has stated that the passage remains open.
Several analysts warn that the true impact on global oil supply may only be seen in the coming months. Bernstein estimates that Brent could reach US$100 per barrel before the end of the year if the Middle East conflict drags on and OECD commercial stocks continue to decline.
Consequently, oil prices are likely to remain high due to the strengthening geopolitical premium. The widening backwardation structure of Brent and WTI, which has widened by more than US$3 per barrel, indicates that the market is beginning to see short-term supply tightening. If supply disruptions persist, inflationary pressures could increase, the US dollar could potentially remain strong, and risk assets such as stocks could be under pressure again.
Source: Newsmaker.id
