Synopsis
Oil prices remained below $95 as hopes for a US-Iran deal eased supply concerns, with near-term direction dependent on progress in geopolitical negotiations and the effective restoration of supply flows.
ETMarkets.comCrude oil remained below $95 as optimism around a possible U.S.-Iran deal eased supply fears, but the outlook remains uncertain and dominates headlines.Oil price fell slightly in early Thursday trading as markets grew hopeful that the United States and Iran could extend their ceasefire by two weeks and continue diplomatic efforts to resolve the conflict in West Asia. This sentiment was also reinforced by reports that Iran may allow ships to transit through the Strait of Hormuzalleviating supply issues.
The White House said Wednesday it hoped to reach an agreement to end the conflict with Iran, but also warned that economic pressure on Tehran would intensify if it did not cooperate.
Raw oil price April 16
Brent crude futures fell 44 cents, or 0.5%, to $94.49 a barrel by 0021 GMT, while U.S. West Texas Intermediate (WTI) crude fell 70 cents, or 0.8%, to $90.59 a barrel.
According to a Reuters report, a source briefed by Tehran said the country could allow ships to move freely along the Omani side of the Strait of Hormuz if an agreement was reached to avoid further escalation.
The ongoing US-Israeli war against Iran has caused the biggest disruption ever to global oil and gas supplies, with Iran restricting traffic across the strait, a key route that accounts for about 20% of global oil and LNG flows.
Meanwhile, U.S. and Iranian officials plan to return to Pakistan for a new round of negotiations as early as this weekend, after talks ended without progress on Sunday. The head of the Pakistani army, acting as mediator, arrived in Tehran on Wednesday to try to prevent further escalation.
What do the experts say?
Until a formal agreement is reached and normal shipping resumes, WTI prices will likely remain volatile in the $80-$100 range.
Brokerage firm Macquarie noted that even as tensions ease, oil prices are likely to remain supported in the $85-$90 range, with a gradual move towards $110 as flows through the Strait of Hormuz normalize. He added that if the disruptions continue into April, Brent could still reach $150 a barrel.
In the future, crude prices may increase from current levels. According to Kayanat Chainwala of Kotak Securities, oil could reach $120 a barrel in the near term and potentially hit $150 if the conflict continues.
Nuvama Institutional Equities echoes the same view. The continued closure of the Strait of Hormuz, which processes about 20 million barrels per day, could push crude prices into the $110-$150 per barrel range.
Market experts believe that crude could enter a phase of structurally higher prices. Ajit Mishra, Senior Vice President of Religious Broking, said the current ceasefire is temporary and a return to pre-war levels, between $70 and $75, could take several months. In the near term, he expects crude to remain in a range of $80-85 on the downside and $95-100 on the upside.
(Disclaimer: The recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of The Economic Times.)
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