Latest news with #non-OPEC
Focus Malaysia
16 hours ago
- Business
- Focus Malaysia
Oil prices spike on Iran-Israel tensions, but sustained rally unlikely: TA
THE escalating confrontation between Iran and Israel has reintroduced volatility to global oil markets. Brent crude surged over 8% following Israel's targeted strikes on Iran's nuclear and military infrastructure. While initial reactions have been strong, TA Securities (TA) believe oil prices could stabilise unless critical assets, such as the Strait of Hormuz, face direct threats. 'We view the geopolitical premium as transient rather than transformative. The sector's risk-reward profile remains balanced, justifying a Neutral call,' said TA. TA reiterates their preference for oil and gas players with strong export linkages and robust cash generation, such as PANTECH and MISC. The global oil supply backdrop remains relatively resilient despite the geopolitical turmoil. OPEC+, led by Saudi Arabia, holds sufficient spare production capacity to offset most short term disruptions from Iran. According to EIA, global spare production capacity stood at approximately 4.55mn barrels per day (bpd) as of May 2025—primarily held by Saudi Arabia, the UAE, and Iraq. This aligns with widely cited estimates suggesting that Saudi Arabia alone contributes about 3 mil bpd, while the UAE and Iraq collectively account for an additional 1–1.5 mil bpd. This spare capacity, defined as oil that can be brought online within 30 days and sustained for at least 90 days, serves as a vital buffer in stabilising markets should Iranian exports (currently ~2 mil bpd) be curtailed. In parallel, US shale producers continue to deliver robust output levels. Despite a decline in rig counts, production has held steady at 13.4 mil bpd, underscoring the productivity gains from technological efficiency and capital discipline. Other non-OPEC contributors like Brazil, Canada, and Guyana are also ramping up supply, contributing to a broader narrative of a well-supplied global market. As such, while the war may add volatility, the probability of a sustained supply shock remains relatively low unless additional producers or infrastructure become targets. Even amid heightened geopolitical risks, the global demand outlook for oil remains underwhelming. Structural headwinds, including muted industrial activity in Europe, China's tepid post-COVID recovery, and persistent inflationary pressures across major economies, are weighing on overall energy consumption. Airlines, a key post-pandemic recovery driver for jet fuel, are also seeing mixed signals. Ticket bookings are strong but jet fuel efficiency gains continue to limit actual oil consumption growth. Furthermore, the stronger-for-longer interest rate narrative in Western economies has delayed business investment and capped industrial output, particularly in energy-intensive sectors such as manufacturing, construction, and transport. Overall, while supply-side fears can generate temporary price rallies, the demand picture remains insufficiently supportive for a sustained oil bull cycle without further macroeconomic improvement. 'We retain our Neutral view on the Oil & Gas sector, as we believe the risk-reward balance remains evenly poised,' said TA. While geopolitical tensions could intermittently support prices, the presence of ample global spare capacity, resilient non-OPEC supply, and muted demand growth limit the probability of a sustained price rally. In this environment, TA favour stock-specific opportunities over a broad sector call.—June 20 2025 Main image: Metro Holding
India Gazette
2 days ago
- Business
- India Gazette
Brent crude prices to remain at USD 70/bbl in FY26 despite Israel-Iran conflict: Report
New Delhi [India], June 19 (ANI): Despite recent volatility and rising conflicts between Israel and Iran, Brent crude oil prices are expected to average around USD 70 per barrel in FY26, according to a report by Emkay Research. The report stated that the oil markets remain fundamentally well supplied, with rising production levels from both OPEC+ and non-OPEC+ countries. It said 'we continue to assume Brent price at USD70/bbl for FY26. Fundamentally, oil markets are well supplied with rising production.' This steady supply is expected to help stabilise prices in the coming weeks, even though geopolitical risks may cause short-term volatility. The report noted that Israel's attack on Iranian nuclear sites and personnel had initially triggered a sharp 12-13 per cent jump in oil prices, with Brent reaching close to USD 80/bbl. Since then, prices have settled around USD 75/bbl, despite ongoing attacks from both sides. Iran has responded by hitting Israeli cities with missiles, and Israel has intensified its strikes on Iran. Signals from the US administration regarding a ceasefire remain unclear. According to the report, unless there is lasting damage to oil and gas infrastructure, similar to earlier patterns seen during the Russia-Ukraine conflict, oil prices are likely to stabilise. A ceasefire could even bring Brent prices down below USD 70/bbl. The report also highlighted that Iran has partially shut its South Pars gas field following Israeli attacks. A major fuel depot and a gas refinery were hit, but the impact seems limited to domestic markets. Israel has suspended operations in two of its gas fields that export to Egypt and Jordan. As a result, spot LNG prices have increased to around USD 13.5/mmbtu, compared to USD 12/mmbtu before the conflict. The report further noted that oil markets in 2025 have remained well supplied with rising inventories. Although near-term volatility may continue, the average Brent crude price for the year is still expected to be around USD 70/bbl. At this price level, both upstream oil players and oil marketing companies (OMCs) are in a safe zone. However, the report believed OMCs offer a more attractive valuation and better risk-reward profile. The report also flagged concerns over the gas market, as the early onset of monsoons has impacted demand, making the gas outlook uncertain. (ANI)
Time of India
2 days ago
- Business
- Time of India
‘Fundamentally well supplied..': Brent crude prices expected to average $70 in FY26 despite Israel-Iran conflict, says report
Brent crude oil prices are projected to average around $70 per barrel in FY26 despite geopolitical turbulence in the Middle East, according to a report by Emkay Research. The agency said oil markets remain 'fundamentally well supplied,' citing rising output from both OPEC+ and non-OPEC+ producers as key factors stabilising prices. Tired of too many ads? go ad free now 'We continue to assume Brent price at USD70/bbl for FY26. Fundamentally, oil markets are well supplied with rising production,' the report said. This outlook comes despite a recent spike in prices caused by Israel's attack on Iranian nuclear infrastructure, which triggered a sharp 12–13 per cent surge in Brent to nearly $80 per barrel. Prices have since moderated to around $75 per barrel, even as tensions remain high. Iran retaliated with missile attacks on Israeli cities, while Israel has ramped up its operations. Yet, according to Emkay, unless key energy infrastructure suffers sustained damage, as witnessed during the Russia-Ukraine war, markets are likely to remain stable. As per the news agency ANI, the report further noted that a ceasefire could potentially drive Brent prices even lower, possibly below the $70 threshold. 'The market is well buffered by existing inventory levels,' Emkay noted, adding that a steady supply outlook would help limit long-term inflationary pressure. The report also flagged limited but notable disruptions. Iran has partially shut its South Pars gas field following Israeli airstrikes. While domestic supplies have been impacted, the wider global market response has been restrained. In contrast, Israel suspended operations at two of its gas fields supplying Egypt and Jordan. Tired of too many ads? go ad free now Spot LNG prices have climbed to $13.5/mmbtu, up from $12 before the conflict began. As per news agency PTI, while Iran exports up to 2 million barrels per day, about 2 per cent of global supply, its long-standing sanctions mean much of that oil is already being sold at a discount to buyers like China. Additionally, OPEC's spare capacity remains unusually high, with over 4 million barrels per day in reserve, primarily from Saudi Arabia and the UAE. The IEA also maintains over 1.2 billion barrels in strategic reserves across OECD nations. Despite the Middle East tensions, demand remains tepid. China's industrial slowdown and its reduced refinery output in May, down 1.8 per cent year-on-year, have softened consumption. The IEA also predicts global supply in 2025 will surpass demand by nearly 1.8 million barrels per day, leaving room for further price cushioning. On the corporate front, Emkay believes that while both upstream producers and oil marketing companies (OMCs) remain within a 'safe zone' at current price levels, OMCs offer more attractive valuations and better risk-reward potential. However, the gas market could face pressure. The early onset of monsoons in South Asia has already reduced demand, and Emkay warns of continued volatility in the sector. Globally, the risks of escalation remain real. If Iran decides to shut down the Strait of Hormuz, through which nearly 20 million barrels of oil transit daily, global prices could surge. While alternate pipelines through Saudi Arabia and the UAE exist, insurance and freight costs have already jumped nearly 60 per cent since hostilities began.
Mint
2 days ago
- Business
- Mint
Brent crude prices to remain at USD 70/bbl in FY26 despite Israel-Iran conflict: Report
New Delhi [India], : Despite recent volatility and rising conflicts between Israel and Iran, Brent crude oil prices are expected to average around USD 70 per barrel in FY26, according to a report by Emkay Research. The report stated that the oil markets remain fundamentally well supplied, with rising production levels from both OPEC and non-OPEC countries. It said "we continue to assume Brent price at USD70/bbl for FY26. Fundamentally, oil markets are well supplied with rising production." This steady supply is expected to help stabilise prices in the coming weeks, even though geopolitical risks may cause short-term volatility. The report noted that Israel's attack on Iranian nuclear sites and personnel had initially triggered a sharp 12-13 per cent jump in oil prices, with Brent reaching close to USD 80/bbl. Since then, prices have settled around USD 75/bbl, despite ongoing attacks from both sides. Iran has responded by hitting Israeli cities with missiles, and Israel has intensified its strikes on Iran. Signals from the US administration regarding a ceasefire remain unclear. According to the report, unless there is lasting damage to oil and gas infrastructure, similar to earlier patterns seen during the Russia-Ukraine conflict, oil prices are likely to stabilise. A ceasefire could even bring Brent prices down below USD 70/bbl. The report also highlighted that Iran has partially shut its South Pars gas field following Israeli attacks. A major fuel depot and a gas refinery were hit, but the impact seems limited to domestic markets. Israel has suspended operations in two of its gas fields that export to Egypt and Jordan. As a result, spot LNG prices have increased to around USD 13.5/mmbtu, compared to USD 12/mmbtu before the conflict. The report further noted that oil markets in 2025 have remained well supplied with rising inventories. Although near-term volatility may continue, the average Brent crude price for the year is still expected to be around USD 70/bbl. At this price level, both upstream oil players and oil marketing companies are in a safe zone. However, the report believed OMCs offer a more attractive valuation and better risk-reward profile. The report also flagged concerns over the gas market, as the early onset of monsoons has impacted demand, making the gas outlook uncertain. This article was generated from an automated news agency feed without modifications to text.
CNBC
3 days ago
- Business
- CNBC
Oil analysts left scratching their heads over Isreal-Iran conflict: 'Your guess is as good as mine'
Analysts are struggling to predict the extent to which Israel and Iran's escalating conflict could influence oil prices. Israel's surprise attack on Iran's military and nuclear infrastructure on Friday has been followed by five days of spiraling warfare between the regional foes. U.S. President Donald Trump on Tuesday called for an "unconditional surrender" from Tehran, warning Washington's patience was wearing thin. Energy markets are weighing the likelihood of direct U.S. involvement in the conflict, as well as the potential for major supply disruptions — particularly worst-case scenarios, such as Iran blocking the highly strategic Strait of Hormuz that links the Persian Gulf to the Gulf of Oman. John Evans, an analyst at oil broker PVM, said Wednesday that a "blanket of unease" had descended upon oil markets in recent days. "Our market is settling into a world where missile exchanges are commonplace but the cynicism of it being normal has yet to set in because of how easily the situation could escalate," Evans said in a research note. Israel's Bazan oil refinery complex sustained damage from an Iranian attack earlier this week, while an Israeli airstrike at the South Pars field, the world's largest gas field, prompted Tehran to partially suspend production. The South Pars gas field is shared between Iran and Qatar. "The situation is as fluid as the underlying commodity it mostly affects and while there is a fraternal 'your guess is [as] good as mine' in future price divination, positioning will continue to be at least defensively long," PVM's Evans said. The chief executives of oil companies of TotalEnergies, Shell, and EnQuest told CNBC on Tuesday that further attacks on critical energy infrastructure could have serious consequences for global supply and prices. Oil prices, which have jumped in recent days, extended gains on Wednesday. International benchmark Brent crude futures with August delivery stood 0.5% higher at $76.79 per barrel at 12:32 p.m. London time. U.S. West Texas Intermediate futures with July delivery traded up 0.5% at $75.19 per barrel. Per Lekander, founder of investment management firm Clean Energy Transition, described the situation for oil markets ahead of Israel's attack on Iran last week as "bad," given plentiful supply growth from OPEC and non-OPEC producers and soft demand. "I was increasingly convinced we were heading for a 2014/2020 reset lower to $30-50 to get capex down and start a new cycle. In fact, the current conflict makes that outcome even more likely when [the] conflict is over as producers are now producing and hedging as much as they can," Lekander said in a note. "While this is going on it is a roulette. We have a $10 [per barrel] risk premium in the price which is fair given that there clearly are some interruptions (mainly Iran exports and some lower tanker loadings)," he added. Looking ahead, Stephen Schork, editor of The Schork Report, on Wednesday said that a significant escalation in the Israel-Iran conflict could push oil prices substantially higher. "We're kind of stabilizing right now. I think we're waiting for that next headline to come out and really, I think that anyone who does not think oil could go higher, I really think they are trading on hope and not reality," Schork told CNBC's "Access Middle East." "We are now facing the biggest threat to the oil markets since Iraq invaded Kuwait in 1990 and perhaps even greater than the 1974 Arab oil embargo," he added. Schork said there was a roughly 5% chance of oil prices climbing to above $103 per barrel within the next five weeks, with much longer odds of crude soaring as high as $160 per barrel by the end of summer, if flows out of the Persian Gulf are seriously disrupted.
