Geopolitics have once again taken centre stage. Economists at Danske Bank analyze Oil’s outlook after war breaking out in the Middle East.
Limited impact from crisis in Middle East
The crisis in the Middle East has so far had little spillover to the oil market, which is reasonable given that the oil supply has not been effected. Hence, for now, oil prices are affected mainly through a higher risk premium.
We look for Brent to average $85/bbl in Q4 and $80/bbl next year.
OPEC+ looks to have a preference for Brent to trade in the $80-$110/bbl range.
The US will likely only resume buying oil for its strategic reserves if prices fall below $80/bbl again.
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