Latest news with #OPEC
Reuters
3 hours ago
- Business
- Reuters
Citi sees oil prices of $75-$78/bbl if war disrupts 1.1 mln bpd of Iran's oil exports
June 19 (Reuters) - An escalation of the Iran-Israeli hostilities could keep Brent oil prices trading about 15% to 20% above pre-conflict levels if the war disrupts 1.1 million barrels per day (bpd) of Iranian oil exports, analysts at Citibank said on Thursday. "This implies Brent prices should be in the $75 to $78/bbl range," Citi said in a note. Prices had been hovering around $65 per barrel in May. Brent crude futures were up $1.48, or 1.9%, to $78.18 a barrel by 1230 ET on Thursday, while U.S. West Texas Intermediate crude for July was up $1.72, or 2.3%, at $76.86. Separately, JP Morgan said in a note that in the most extreme case of a broader regional conflagration that includes the closure of the Strait of Hormuz, it estimates that oil prices could surge to $120-$130 per barrel. The Iran-Israel conflict has raised fears of potential supply disruptions in the Middle East, a key oil-producing region, pushing crude prices higher as traders react to the growing geopolitical risk. Iran is OPEC's third-largest producer, extracting about 3.3 million barrels per day (bpd) of crude oil. According to Citi, a disruption of about 3 million bpd over a multi-month period could push prices to $90 bbl. Any closure of the Strait of Hormuz could cause a sharp price spike, but Citi believes it would be brief as efforts would focus on a quick reopening. Iranian oil export disruptions may have a smaller impact on oil prices than expected due to falling exports and reduced Chinese purchases as prices are higher now, it said. "Production elsewhere globally may have risen sufficiently to offset the disruption impact, particularly if the production disruption was expected," Citi noted. Increased supply from the Organization of the Petroleum Exporting Countries could also mitigate the impact of potential Iranian oil export disruptions, it added. On Wednesday, Goldman Sachs noted that it estimates a geopolitical risk premium of around $10 per barrel following the rise in Brent prices to $76-77 per barrel, while Barclays said that if Iranian exports are reduced by half, crude prices could rise to $85 per barrel and that prices could move past $100 in the "worst-case" scenario of a wider conflagration.
Yahoo
3 hours ago
- Business
- Yahoo
Citi sees oil prices of $75-$78/bbl if war disrupts 1.1 million bpd of Iran's oil exports
(Reuters) -An escalation of the Iran-Israeli hostilities could keep Brent oil prices trading about 15% to 20% above pre-conflict levels if the war disrupts 1.1 million barrels per day (bpd) of Iranian oil exports, analysts at Citibank said on Thursday. "This implies Brent prices should be in the $75 to $78/bbl range," Citi said in a note. Prices had been hovering around $65 per barrel in May. Brent crude futures were up $1.48, or 1.9%, to $78.18 a barrel by 1230 ET on Thursday, while U.S. West Texas Intermediate crude for July was up $1.72, or 2.3%, at $76.86. [O/R] Separately, JP Morgan said in a note that in the most extreme case of a broader regional conflagration that includes the closure of the Strait of Hormuz, it estimates that oil prices could surge to $120-$130 per barrel. The Iran-Israel conflict has raised fears of potential supply disruptions in the Middle East, a key oil-producing region, pushing crude prices higher as traders react to the growing geopolitical risk. Iran is OPEC's third-largest producer, extracting about 3.3 million barrels per day (bpd) of crude oil. According to Citi, a disruption of about 3 million bpd over a multi-month period could push prices to $90 bbl. Any closure of the Strait of Hormuz could cause a sharp price spike, but Citi believes it would be brief as efforts would focus on a quick reopening. Iranian oil export disruptions may have a smaller impact on oil prices than expected due to falling exports and reduced Chinese purchases as prices are higher now, it said. "Production elsewhere globally may have risen sufficiently to offset the disruption impact, particularly if the production disruption was expected," Citi noted. Increased supply from the Organization of the Petroleum Exporting Countries could also mitigate the impact of potential Iranian oil export disruptions, it added. On Wednesday, Goldman Sachs noted that it estimates a geopolitical risk premium of around $10 per barrel following the rise in Brent prices to $76-77 per barrel, while Barclays said that if Iranian exports are reduced by half, crude prices could rise to $85 per barrel and that prices could move past $100 in the "worst-case" scenario of a wider conflagration. Sign in to access your portfolio
The Age
3 hours ago
- Business
- The Age
Oil prices have jumped. Do you need to run to the petrol station?
Chalmers has spent the week spruiking his latest plans to boost our living standards – but oil prices have clearly trickled to the front of his mind. This might have consequences for Australians at the petrol bowser, he told ABC Radio on Thursday, but there's also a lot of concern about what it might mean for inflation, and it's a 'dangerous time' for the global economy. But how much of a worry should it really be? Well, first, it's important to remember just how much we rely on oil. In 2022-23, oil was our most important type of fuel, making up nearly 40 per cent of Australia's energy use. That's not even accounting for the other ways we use it: to produce plastics, chemicals, lubricants and the sticky stuff we use to pave roads. Petrol is the single biggest weekly expense for most households, and it affects transport and energy costs for nearly all our businesses. Basically, changes in the price of oil ripple through nearly every crevice of the country. Loading A shortage of oil makes business harder – and in some cases, impossible – to do, strangling the supply of many goods. If Iran decides to shut the Strait of Hormuz – a key shipping route that carries tens of millions of barrels of oil every day – the delays and additional costs of taking longer routes will drive up costs further. Those costs will probably be passed on through higher prices by businesses – and not just those directly dealing the stuff through petrol pumps. The price of oil itself is determined, like most things, by the forces of demand and supply. But it's also affected by expectations of supply and demand. Most of the time, the physical product doesn't even change hands. Instead, the market is largely made up of buyers and sellers who enter into 'futures' contracts, which are legal agreements to buy or sell something (in this case, oil) at a particular price and time in the future. It's a bet of sorts: buyers are hoping the price they lock themselves into will be lower than it will be in the future, and sellers are hoping it will be higher. When Brent Crude Oil and the US West Texas Intermediate (WTI) – two types of oil futures – surged 13 per cent last week, that reflected worries, not just about a short-term dip in supply, but concerns that the conflict could worsen. But even so, the oil market hasn't moved as crazily as we might have expected. As Dr Adi Imsirovic points out, Iran itself only accounts for about 2 per cent of the world's oil supply, shipping most of it to China, and while a sudden drop in Iranian oil exports would usually trigger stronger panic, there's a few factors keeping it in check – for now. Loading First, Iran is part of a big group of oil exporters known as the Organisation of the Petroleum Exporting Countries (OPEC), which produces about 40 per cent of the world's crude oil. OPEC, because of the huge share of oil it produces, tends to co-ordinate the amount of oil its members supply to the world to keep prices from falling through the floor (and profits from slipping too much). It just so happens that OPEC is in the middle of reversing production cuts it imposed early in the COVID-19 pandemic, leaving it with an unusually large spare capacity of roughly 4 million barrels a day – mostly held by Saudi Arabia and the United Arab Emirates. And although there are worries about the Strait of Hormuz being closed, Imsirovic says there are alternative supply routes. That's not to say we won't feel anything here in Australia. The increased risk of wider conflict in the Middle East means oil prices – and especially oil futures – have jumped. And shipping costs have sailed higher, including the cost of insurance for ships travelling through the Strait of Hormuz which has climbed 60 per cent since the start of the war. Loading We don't import our oil directly from Iran, buying most of it from countries such as South Korea, the United Arab Emirates and Singapore. But the cost of petrol in Australia will probably rise over the next few weeks because Australian fuel prices are pegged to international benchmarks. And because Australia doesn't exist in a vacuum, the slowdown in economies worldwide – from the uncertainty, higher costs and delays – will undoubtedly have a knock-on effect for our economy. Slower growth and higher inflation will challenge the Reserve Bank, which next month must decide which way to take the country's interest rates. If the US central bank's decision this week is anything to go by, the Reserve Bank will probably keep rates on hold to see how things play out. The panic in oil markets has seemed to wear off a little since Israel's attack on Iran, but it will only last so long as the conflict doesn't escalate. There's no crisis in oil markets yet, but your bill at the bowser might come in a little higher over the next few weeks. As long as the global economy is stuck in limbo, don't be surprised if our economy isn't running like a well-oiled machine.
Sydney Morning Herald
3 hours ago
- Business
- Sydney Morning Herald
Oil prices have jumped. Do you need to run to the petrol station?
Chalmers has spent the week spruiking his latest plans to boost our living standards – but oil prices have clearly trickled to the front of his mind. This might have consequences for Australians at the petrol bowser, he told ABC Radio on Thursday, but there's also a lot of concern about what it might mean for inflation, and it's a 'dangerous time' for the global economy. But how much of a worry should it really be? Well, first, it's important to remember just how much we rely on oil. In 2022-23, oil was our most important type of fuel, making up nearly 40 per cent of Australia's energy use. That's not even accounting for the other ways we use it: to produce plastics, chemicals, lubricants and the sticky stuff we use to pave roads. Petrol is the single biggest weekly expense for most households, and it affects transport and energy costs for nearly all our businesses. Basically, changes in the price of oil ripple through nearly every crevice of the country. Loading A shortage of oil makes business harder – and in some cases, impossible – to do, strangling the supply of many goods. If Iran decides to shut the Strait of Hormuz – a key shipping route that carries tens of millions of barrels of oil every day – the delays and additional costs of taking longer routes will drive up costs further. Those costs will probably be passed on through higher prices by businesses – and not just those directly dealing the stuff through petrol pumps. The price of oil itself is determined, like most things, by the forces of demand and supply. But it's also affected by expectations of supply and demand. Most of the time, the physical product doesn't even change hands. Instead, the market is largely made up of buyers and sellers who enter into 'futures' contracts, which are legal agreements to buy or sell something (in this case, oil) at a particular price and time in the future. It's a bet of sorts: buyers are hoping the price they lock themselves into will be lower than it will be in the future, and sellers are hoping it will be higher. When Brent Crude Oil and the US West Texas Intermediate (WTI) – two types of oil futures – surged 13 per cent last week, that reflected worries, not just about a short-term dip in supply, but concerns that the conflict could worsen. But even so, the oil market hasn't moved as crazily as we might have expected. As Dr Adi Imsirovic points out, Iran itself only accounts for about 2 per cent of the world's oil supply, shipping most of it to China, and while a sudden drop in Iranian oil exports would usually trigger stronger panic, there's a few factors keeping it in check – for now. Loading First, Iran is part of a big group of oil exporters known as the Organisation of the Petroleum Exporting Countries (OPEC), which produces about 40 per cent of the world's crude oil. OPEC, because of the huge share of oil it produces, tends to co-ordinate the amount of oil its members supply to the world to keep prices from falling through the floor (and profits from slipping too much). It just so happens that OPEC is in the middle of reversing production cuts it imposed early in the COVID-19 pandemic, leaving it with an unusually large spare capacity of roughly 4 million barrels a day – mostly held by Saudi Arabia and the United Arab Emirates. And although there are worries about the Strait of Hormuz being closed, Imsirovic says there are alternative supply routes. That's not to say we won't feel anything here in Australia. The increased risk of wider conflict in the Middle East means oil prices – and especially oil futures – have jumped. And shipping costs have sailed higher, including the cost of insurance for ships travelling through the Strait of Hormuz which has climbed 60 per cent since the start of the war. Loading We don't import our oil directly from Iran, buying most of it from countries such as South Korea, the United Arab Emirates and Singapore. But the cost of petrol in Australia will probably rise over the next few weeks because Australian fuel prices are pegged to international benchmarks. And because Australia doesn't exist in a vacuum, the slowdown in economies worldwide – from the uncertainty, higher costs and delays – will undoubtedly have a knock-on effect for our economy. Slower growth and higher inflation will challenge the Reserve Bank, which next month must decide which way to take the country's interest rates. If the US central bank's decision this week is anything to go by, the Reserve Bank will probably keep rates on hold to see how things play out. The panic in oil markets has seemed to wear off a little since Israel's attack on Iran, but it will only last so long as the conflict doesn't escalate. There's no crisis in oil markets yet, but your bill at the bowser might come in a little higher over the next few weeks. As long as the global economy is stuck in limbo, don't be surprised if our economy isn't running like a well-oiled machine.
Time of India
4 hours ago
- Business
- Time of India
icra: 4 reasons why crude oil is not likely to sustain $80/bbl. How is India impacted?
Here are 4 reasons why Brent may sustain $80 per bbl: 1) Iran's Strait of Hormuz gamble too costly to close ADVERTISEMENT 2) OPEC production 3) US Shale factor ADVERTISEMENT 4) Global oil demand growth projections ADVERTISEMENT Impact on India While the Israel-Iran tension has kept crude oil on the boil with an 8% jump in the past eight days and 23% over a month, the black gold is unlikely to breach the $80 per barrel mark, according to estimates by a couple of brokerages."While the Iran–Israel conflict is serious and merits close monitoring, we reckon Brent Oil price is unlikely to sustain above US$80/bbl in a durable way unless the Strait of Hormuz is closed, or critical Gulf infrastructure is targeted," Yes Securities said in a note. ICRA too expects crude prices to average between $70-80/bbl for persistent geopolitical tensions and repeated threats, ranging from the Iran–Iraq War to post-Iran Nuclear deal fallout, Iran has never acted on its threat to close the Strait of Securities calls this restraint strategic and economic. The Strait handles nearly 20% of global oil consumption and is vital for Qatar's LNG exports, Iran's own trade, and the energy trade of regional allies like Iraq. A full closure would not only trigger military retaliation, particularly from the US, but also damage Iran's economic interests and international standing, this brokerage has wielded the threat of disruption as a geopolitical bargaining tool, without crossing the line into direct confrontation, Yes OPEC holding spare capacity of 4mbpd—well above Iran's 1.5mbpd exports—and a projected global market surplus of 0.9mbpd before the Israel-Iran flare-up, there is ample supply believes that even if Iranian supplies of 1.5mbpd are taken out, OPEC's spare production capacity of 4mbpd is good enough to compensate for the 2008, the rise of US shale has added millions of barrels per day to global supply, increasing flexibility and price elasticity. This has allowed the market to absorb geopolitical shocks more effectively, with tensions involving Iran, Libya, or Venezuela causing only short-lived price spikes."OPEC's diminished market share and increased spare capacity, especially from Saudi Arabia and the UAE, have further capped volatility, making oil prices more range-bound and positioning US shale as a soft ceiling on prices," Yes Securities which is the second largest consumer of oil, has seen a subdued demand post-COVID due to economic rebalancing and a weak real estate sector, Yes Securities said. Long-term energy transition trends such as the rise of electric vehicles, improved fuel efficiency, and supportive green energy transition policies are further restraining demand growth in OECD countries."This softened outlook is mirrored in recent agency forecasts. The International Energy Agency now expects global oil demand to grow by about 0.72mbpd in 2025, down from the earlier estimate of 1mbpd. EIA now projects global oil consumption to rise by 0.8mbpd in 2025, down from the earlier projection of 1mbpd," Yes to ICRA, crude oil imports from Iraq, Saudi Arabia, Kuwait and the UAE that pass through the Strait of Hormuz (SoH) account for 45-50% of total crude imports by India. Moreover, about 60% of the natural gas imports by India pass through the SoH.A $10/bbl increase in the average price of crude oil for the fiscal year will typically push up net oil imports by $13-14 billion during the these elevated crude oil prices, while the profitability of upstream players will remain healthy and their capex plans will remain intact, the marketing margins of downstream players will be impacted, along with the expansion of LPG under-recoveries.
