FGE sees Brent crude potentially climbing to $120-$150 per barrel if prolonged Middle East disruptions remove more oil from the global market, with physical crude already trading at elevated levels.
Highlights
- FGE sees Brent crude potentially rising to $120-$150 per barrel.
- Brent moved above $107 amid concerns over Middle East supplies.
- Physical crude is already trading around $120-$130 in some locations.
- Another 2-4 million barrels per day of supply losses could intensify pressure.
New Delhi: Global oil prices could climb to levels not seen in years if disruptions across the Middle East continue, with energy consultancy FGE warning that Brent crude could potentially reach $120-$150 per barrel.
Iman Nasseri, Senior Vice President for Middle East and Asia at FGE, told NDTV Profit that prolonged disruptions to physical oil supplies could push futures prices significantly higher.
Brent crude has already moved above $107 per barrel, as traders assess supply risks across the Middle East and the shutdown of Saudi Arabia’s strategically important East-West pipeline.
According to Nasseri, the loss of another 2 million to 4 million barrels per day of crude production or supply could further tighten the market.
The pressure is already visible in the physical oil market. Physical crude barrels are trading at around $120-$130 per barrel, depending on the location, while prompt cargoes are commanding premiums of about $20-$30.
If physical barrels remain unavailable for an extended period, Brent futures could eventually move closer to these physical-market prices.
Saudi Pipeline Becomes Key Risk
Saudi Arabia’s East-West pipeline has been shut as a precautionary measure. The market is currently factoring in disruption or reduced deliveries lasting roughly two to three weeks.
Storage facilities at Yanbu could help maintain crude loadings for approximately 15 to 25 days, according to Nasseri. However, a pipeline shutdown lasting beyond two weeks could significantly increase pressure on Brent futures.
The oil market is simultaneously dealing with broader supply risks across the Middle East, including disruptions affecting oil fields and threats to shipping through the Strait of Hormuz, one of the world’s most important energy transit routes.
Jonathan Barratt, Chief Investment Officer at ETO Markets, also sees scope for a further rise in oil prices, saying levels of around $125-$130 per barrel are possible.
However, crude prices are likely to remain highly volatile. A prolonged conflict and continued supply losses could keep prices elevated, while weakening global economic demand or an easing of geopolitical tensions could limit the upside.
For major oil-importing economies such as India, a sustained rise in international crude prices would also increase concerns around the import bill and inflation
