Should Iranian supply fall by 1.75 million barrels a day, Brent would peak at US$90.
The global oil market is trying to figure out the likely trajectory for energy prices as the crisis in the Middle East escalates. Crude futures are presently near US$79 a barrel, having surged in early Asian trading after the US hit three Iranian nuclear sites at the weekend.
Brent then pared some of its gains, with a renewed focus that actual flows are so far unhindered.
“The economic incentives, including for the US and China, to try to prevent a sustained and very large disruption of the Strait of Hormuz would be strong,” the analysts said.
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The bank still assumes there’ll be no significant disruptions to flows, although “the downside risks to energy supply and the upside risk to our energy price forecasts have risen”, they said.
Natural-gas markets are also seen at risk. European benchmark futures — known as the Title Transfer Facility, or TTF — may possibly rise closer to EUR74 ($109.73) per megawatt hours or about US$25 per million British thermal units, a level that hurt demand during the 2022 European energy crisis, the analysts said.
A hypothetical, large and sustained disruption of the strait would push natural gas toward EUR100 a megawatt hour, they said. The waterway connects the Persian Gulf to the Indian Ocean, and is a vital conduit for energy.
