Geopolitics once again takes center stage. The economists of Danske Bank analyze the prospects for oil after the outbreak of the war in the Middle East.
Limited impact of the crisis in the Middle East
So far, the Middle East crisis has had little impact on the oil market, which is reasonable given that crude oil supplies have not been affected. Hence, for now, oil prices are affected mainly through a higher risk premium.
We expect Brent to average $85/bbl in the fourth quarter and $80/bbl next year.
OPEC+ seems to prefer Brent to trade in the $80-$110/bbl band.
The US is likely to only resume purchasing oil for its strategic reserves if prices fall below $80/bbl again.
Source: Fx Street
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