Rystad Energy expects crude oil prices to move toward US$150/barrel if hostilities between the U.S. and Iran were to resume in earnest, according to a Wednesday note.
The latest escalation has brought the ceasefire to its most difficult moment so far, Rystad said. The uncertainty has been injecting volatility into oil price moves
"At this stage, it is too early to say whether the current escalation marks a full resumption of hostilities or a dangerous but still containable episode," said Jorge Leon, senior vice president and head of geopolitical analysis at Rystad.
However, price rises could also be blunted by record Strategic Petroleum Reserve releases that has resulted in record U.S. exports, lower crude imports by China, and crude bypassing the Strait of Hormuz via Saudi Arabia's Yanbu port, Leon noted.
"Oil price volatility is likely to remain elevated until there is clearer evidence that the ceasefire can hold or that diplomatic channels are regaining traction," Leon said.