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<Research>CICC: Brent Oil May Rise Above US$120/ Barrel if Strait of Hormuz Disruption Extends to 2Q in 'Risk' Scenario
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CICC released a research report on Sunday (8th) saying that the geopolitical conflict between the US and Iran continued to escalate, with multiple oil and gas facilities in Iran and surrounding Middle Eastern oil-producing countries damaged. The broker had previously indicated that the supply risk exposure expanded and may reverse the expectation of a spot surplus, which may have already become a reality. The short-term oil price increase of US$10-15 has also been realized. On this basis, there is also progress beyond expectations in extreme risk scenarios. From 3 to 5 March, the oil trade volume through the Strait of Hormuz dropped to zero, and Brent oil prices broke through US$90 per barrel, with the recent contango basically equivalent to the level during the Russia-Ukraine conflict in 2022, possibly pricing in the initial disruption of trade through the Strait of Hormuz, according to shipping schedule data. In the 'risk' scenario, if the Strait of Hormuz trade disruption continues into 2Q26, it suggests that Brent oil price pivot may rise above US$120 per barrel in 2Q26, potentially leading to significant consumption of commercial crude oil inventories and forced release of SPR by OECD countries. Looking further ahead, the suppression of demand due to excessive oil price hikes may dominate the market fundamentals' rebalancing, with Brent oil prices possibly falling back to US$70-80 per barrel in 2H26. AASTOCKS Financial News Website: www.aastocks.com |
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