The conflict between Israel and Iran continues to escalate, and investors pay close attention to whether the increasingly severe situation in the Middle East will affect the Strait of Hormuz, the major artery of energy transportation, and thus serio...
The conflict between Israel and Iran continues to escalate, and investors pay close attention to whether the increasingly severe situation in the Middle East will affect the Strait of Hormuz, the major artery of energy transportation, and thus seriously interfere with energy supply.
Some analysts even pointed out that the possibility that the price of Brent crude oil (Brent) will rise by more than US$100 per barrel (about S$128).
Xu Daoyi pointed out that the current market risk sentiment is fragile and he is worried about any event that may lead to the escalation of the situation; and in the early stages of the Russian-Ukrainian conflict in 2022, Brent crude oil price once peaked at US$139 per barrel.
The Strait of Hormuz connects the Persian Gulf and the Indian Ocean, and undertakes about 20% of the world's oil transportation. According to Reuters, an Iranian official pointed out on Saturday (June 14) that Tehran is evaluating whether to close the Strait of Hormuz.
Brent crude oil futures price is currently $74.23 per barrel, while the US West Texas Intermediate (WTI) price is $72.98 per barrel.
Xu Daoyi, general manager of the Wealth Consulting Department of OCBC Bank, sent a report to Lianhe Zaobao to analyze that Israel's attack on Iran may only affect oil prices in the short term. But if the situation escalates into larger regional conflicts, Brent crude oil prices could break above $100 a barrel, or even reach $120 a barrel.
JPMorgan analysts also warned that the worsening situation in the Middle East could trigger a retaliatory reaction from major oil-producing countries in the region, which account for one-third of the global oil production. “Under this severe situation, oil prices are expected to soar to the range of $120 to $130 a barrel.”
