Oil jumps 10% on Iran conflict and could spike to $100 a barrel, analysts say
Written by Seher Dareen and Dmitry Zhdannikov
LONDON, March 1 (Reuters) – Oil traders said Brent crude rose 10% to nearly $80 a barrel on Sunday, while analysts predicted prices could rise as high as $100 after U.S. and Israeli attacks on Iran dragged the Middle East into a new war.
ICIS Energy and Refining Manager Ajay Parmar said, “Although military attacks support oil prices, the most important factor here is the closure of the Strait of Hormuz.”
Trade sources said most tanker owners, major oil companies and trading companies suspended shipments of crude oil, fuel and liquefied natural gas through the Strait of Hormuz after Tehran warned ships not to pass through the waterway. More than 20 percent of global oil is transported through the Strait of Hormuz.
“We expect prices to open much closer to $100 per barrel after the weekend and maybe exceed this level if we see a long-term disruption in the Bosphorus,” Parmar said.
RBC analyst Helima Croft said Middle East leaders have warned Washington that a war against Iran could lead to oil prices rising above $100 a barrel. Barclays analysts also said prices could rise to $100.
The OPEC+ group of oil producers agreed on Sunday to increase production by 206,000 barrels per day (bpd) from April; this is a modest increase, representing less than 0.2% of global demand.
Rystad energy economist Jorge Leon said some alternative infrastructure could be used to bypass the Strait of Hormuz, but the net effect of closing it would be a loss of 8 to 10 million barrels of crude oil supply per day, even after diverting some flows through Saudi Arabia’s East-West pipeline and the Abu Dhabi pipeline.
Rystad expects prices to rise $20 a barrel to about $92 a barrel when trading opens.
The Iran crisis has also led Asian governments and refineries to evaluate oil stocks and alternative shipping routes and supplies.
(Reporting by Seher Dareen and Dmitry Zhdannikov, Editing by David Goodman)
