2024-04-14 10:30:00
Special platform for oil production
For many days, oil prices remained hostage to mounting fears as a result of a possible Iranian response at the time to the raid that targeted the Iranian consulate headquarters in Damascus and resulted in the death of 13 people, amid different scenarios regarding the extent of the impact of that response by Tehran on price levels, in relation to its size and repercussions.
Until the Iranian attack on Israel last night contradicted many of those expanded estimates, which put widespread pressure on oil prices and made the markets hold their breath in anticipation of this response, which remained relatively limited compared to those previous expectations.. So how will this scene have an impact on oil prices?
Oil prices ended last week with an increase of about 1 percent during Friday trading. Affected by the escalation of fears and tensions in the Middle East region, it recorded weekly losses due to many factors. Among them are negative expectations from the International Energy Agency for the growth of global demand for crude, in addition to concerns about the slowdown in US interest rate cuts.
Brent crude futures rose 71 cents, recording $90.45 per barrel, while US West Texas Intermediate crude futures increased 64 cents to $85.66 upon settlement on Friday. Brent fell 0.8 percent on a weekly basis, compared to a decline of more than 1 percent for US crude.
It is noteworthy that before targeting the Iranian consulate in Damascus, oil prices were hovering in a price range of $85.15 per barrel for US West Texas Intermediate crude futures for May delivery, and $88.94 per barrel for Brent crude.
In trading on April 4, Brent crude oil exceeded $90 per barrel, for the first time in five months, under the pressure of geopolitical developments.
In the week before last – ending on April 5 – oil prices recorded weekly gains – after Iran, the third largest producer in the Organization of the Petroleum Exporting Countries, vowed to respond – and US crude futures ended the week’s trading at $86.91 per barrel, and at $91.17 per barrel for crude oil. Brent.
Limited rejection
From London, energy economics expert, Nihad Ismail, confirmed in exclusive statements to “Iqtisad Sky News Arabia” website that:
- Despite geopolitical tensions and Iranian threats over the past few days, prices remained in a narrow range between $89 and $91 for standard Brent crude, and by the end of the week prices suffered a weekly loss of about 1 percent.
- In light of recent developments and with the increase in Iranian threats, Brent crude oil rose on average by 2 percent to $90.50 per barrel (during that recent period).
- The markets are awaiting the start of new early trading, to translate the repercussions of the Iranian response and its impact on the markets into practical terms.
He expected that we might see what he described as “modest” increases in oil prices. Due to the escalation of geopolitical tension, especially since the Iranian response had no significant impact militarily.
But at the same time, he believes that in the event of an Israeli response or escalation, the expansion of the ongoing war in the Middle East, and a broader American intervention, prices may cross the $100 per barrel barrier later.
The energy economics expert also pointed out, in his interview with the “Eqtisad Sky News Arabia” website, that if Iran also closes the Strait of Hormuz, through which 20 percent of global oil consumption passes, that is, up to 20 million barrels per day (this is within the most severe escalation scenarios… Risk) Prices may jump to $120 per barrel, but this remains a weak possibility at this stage. Especially since Iran has been threatening to close the Strait of Hormuz since 2010 and before, but has not implemented the threats until now.
Ismail explained that markets in general are awaiting caution and the scene may change, and we see sudden fluctuations in prices if a major development and escalation occurs on the geopolitical scene.
Stressful factors
Many factors are putting pressure on oil prices, including the current geopolitical tensions, as well as the varying indicators regarding the interest rate path in the United States of America, in addition to estimates related to the demand for oil, as well as the demand in China.
OPEC expected a strong rise in demand for fuel during the summer, and also stuck to its expectations of relatively strong growth in global demand for oil in 2024.
- According to what was stated in the organization’s monthly report, global demand for oil will rise by 2.25 million barrels per day in 2024 and 1.85 million barrels per day in 2025, and there has been no change in both forecasts compared to last month.
- Boosting economic growth could further support oil prices, which have already risen above $90 a barrel this year due to tight supplies and the war in the Middle East.
The International Energy Agency had reduced its forecast for oil demand growth for 2024 at the end of last week, noting lower-than-expected consumption in OECD countries and a decline in factory activity.
- The agency lowered its forecast for oil demand growth for this year by 130,000 barrels per day to 1.2 million barrels per day, adding that pent-up demand from China, the largest oil importer after the easing of Covid-19 restrictions, has ended.
- The International Energy Agency also expected global oil production to rise during 2024 by about 770,000 barrels per day amid an increase in supplies from outside OPEC+ countries.
- According to the International Energy Agency, global oil inventories rose in February by about 43 million barrels, recording their highest levels in 7 months.
Widespread anticipation
On the other hand, in exclusive statements to the “Eqtisad Sky News Arabia” website, oil and gas expert, Lori Haitian, said that the recent conditions taking place in the region and with the recent Iranian strikes, this would have a direct impact on oil prices, given the extent to which Incidents will escalate in the coming period.
She added that the following threats regarding targeting Israel in response and at the same time warning the United States of America, and in conjunction with the entry of France and Britain to defend Israel, all of this increases the state of instability regarding the current conditions, in addition to the possibilities of Russia also entering the line and confirming its entry into the war in the event of a war. On Iran.
She indicated that with any serious escalation, it is expected that this will affect prices higher in light of these developments and until the situation calms down and stabilizes. In the region.
The oil and gas expert in the Middle East explained that during the last hours, the statement issued by the Iranian mission to the United Nations regarding the announcement of the end of the operation for it was prepared. This may contribute to calming matters in the event that there is no Israeli escalation in the coming hours, and thus oil prices do not rise in a way. Crazy.
Iranian Chief of Staff Mohammad Bagheri had threatened a broader escalation if Israel responded, and said: “Our response will certainly be much broader if Israel tries to respond to last night’s attacks.” Muhammad Bagheri added, “Our operations focused on the air base from which the Israeli planes that attacked our consulate were launched.”
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