Source: Bloomberg
Author: yongchang chin, ben Bartenstein
Iran's unprecedented attacks on Israel have almost did not trigger violent volatility of crude oil futures. Traders believe that the response of oil prices is plain because the relevant parties have made full reminders before the incident, and the market expectation conflict will still be within the controlled range.
As Israel weighs their reaction to this attack, the market observer's point of view on the outlook for the oil market is as follows:
"Risk Premium" -Goldman Sachs
"Considering the downlink risk facing the supply, we expect oil prices to reflect the risk premium of $ 5-10 per barrel," said Goldman Sachs analysts such as Daan Struyven in a report."Israel has a high degree of uncertainty for the potential response of Iran's attack, and may decide the threat of oil supply in the region."
Analysts said that in the past two years, Iran's crude oil production has increased by more than 20%to 3.4 million barrels per day, accounting for about 3.3%of global supply.Therefore, if the market reflects that the possibility of decreased supply in Iranian supply in pricing is higher, this may lead to an increase in geopolitical risks.
"Expectation has digested" -ing
ING GROEP NV strategist Warren Patterson and Ewa Manthey said in the report that the market has digested some form of attacks, and limited destruction and no casualties means that Israel may take a more restrained response, how Israeli is how IsraeliResponse is now the key uncertainty.
They said that for the oil market, "the first risk is that the oil sanctions on Iran will be more stringent, which may lead to the loss of oil supply of 500,000 to 1 million barrels per day."Other possible results include an Energy infrastructure that attacks Iran or Iran's blockade of the Holmus Strait.
"Back to the Shadow War" -RBC Capital Markets
Helima Croft and other analysts said that the Israeli government's response to Iran's attack will decide whether the situation will evolve into a larger wars or the risk of upgrading.They said that Israel's major revenge may trigger a cycle of the lack of stability.
"In this case, in view of the guidance and drone attacks, Iran seized a ship in the Strait of Holmus, we believe that the risks facing oil prices are not insignificant," analysts said."However, if Israel disposes it moderate or makes a minimum response, then Iran seems likely to take this opportunity to make this war return to the shadow war."
"The possibility of upgrading is not much" -Bao and New Bank
Daniel Hynes, a senior commodist strategist at the Australian and New Bank, said that the Iranian attack has fully reminded before the occurrence, which means that the possibility of upgrading any situation is not great.The geopolitical risk premium has been high, so before Israel's response is clear, the reasons for further upward movement are not sufficient.
"Before pushing the price, the market needs to see further evidence of supply facing greater risks," he added.
100 US dollars -Citi Group
Citi's baseline is expected to be tight in the Middle East, which is still "very high", which supports oil prices.The bank raised its short -term price forecast, and increased the three -month target price of WTI crude prices by $ 8.
"We think there is no digestion of the current market, and the direct conflict between Iran and Israel may continue. We estimate that this may promote the increase in oil prices to more than $ 100 per barrel, depending on the nature of the event," Max Layton et al.Analysts wrote in the report.
Maintain balance -SVB Energy
"If the retaliatory attack between Iran and Israel has stopped at the current level, or to avoid the regional situation upgrades without damage to oil production and export facilities, the market should maintain a balance," SVB Energy InternationalLLC. founder and president Sara Vakhshouri."The market fundamentals seem to be stable, and OPEC+close attention to the prospects of demand growth in summer. If the market has a shortage of supply, OPEC+may consider reducing voluntary reduction and increasing output."
"More severe sanctions" -A/S Global Risk Management
"The situation is rapidly changing. If Israel hints that no revenge will be taken, the market tensions will ease," said Arne Lohmann Rasmussen, the research director of A/S Global Risk Management.He said that the worst expectation situation in the market was that the Strait of the Hormuz was closed, but this result seemed unlikely.
On the contrary, "Iran may be sanctioned more severe," he said."The US -led sanctions on Iraq have been very comprehensive, but Iran can still improve production and exports in the past year."
