Escalating Middle East Tension Could Trigger Oil Prices To Hit $100 Per Barrel
Oil prices could soon soar to $100 per barrel amid growing fear about conflict in the Middle East, according to an oil analyst for CNBC.
“I don’t think it is unfeasible to see triple-digit oil prices at some point this year if things really kick off in the Middle East.” says Anish Kapadia, founder and managing director of Akap Energy.
Kapadia recalls market participants being mocked for predicting six months ago that crude oil prices would hit between $60 and $70. With the worsening situation in the war-torn Middle East, oil prices are likely to propel to more than $100 per barrel later this year.
Last week, President Donald Trump’s comments about the possible military strike against Syria in response to a suspected chemical attack sent both benchmarks to post their most significant gain in more than eight months on Friday.
Brent crude traded at $72.26 around noon, a 0.3 percent rise, while WTI saw a 0.4 percent increase to $67.30. Both have raised about $5 since the start of the week.
Friday night, the U.S. did launch military strikes against Syria and that effect on oil prices may be seen this week.
Last Wednesday, the U.S. crude price reached its highest level in the past three years at the end of the trading session, amid worries about recent tensions that could disrupt oil supplies.
WTI prices for May delivery went up 25 cents and finished at $67.07 per barrel at New York Mercantile Exchange.
Brent prices for June shipment slipped 4 cents and closed at $72.02 per barrel at London-based ICE Futures Europe Exchange.
International Energy Agency prefers to wait and see
Despite elevated tensions, the International Energy Agency (IEA) declined to provide an estimate on whether or not the current situation in the Middle East would continue to escalate oil prices.
“It remains to be seen if recently elevated prices are sustained and if so what are the implications for the market demand and supply dynamics,” said the organization in a statement.
Additionally, efforts from the Organization of Petroleum Exporting Countries (OPEC) and its allied non-OPEC oil-producing nations contributed to the rise in oil prices starting in January 2017.
The output cuts are expected to last throughout this year, aiming to clear a global supply overhand and boost prices. This month, oil prices have risen to over $70 per barrel, giving a boost to the U.S. shale oil production.
Paris-based IEA called OPEC’s move to slash oil stocks a “mission accomplished.”
On Thursday, OPEC said oil supplies in developed nations only reached 43 million barrels above the past five years’ average. IEA reported the figure at 30 million barrels at the end of February.