US bank releases USD130 oil caution

(MENAFN) Amid escalating tensions between Israel and Iran, Bank of America has issued a warning that an all-out conflict between the two nations could significantly impact global oil prices. According to a research note seen by CNBC, the bank's experts have cautioned clients that a full-scale war between Israel and Iran could drive oil prices up by USD30 to USD40 per barrel.

Following Iran's recent direct military attack on Israel in retaliation for an alleged Israeli airstrike on an Iranian diplomatic facility in Syria, tensions between the two adversaries have reached a critical point. The potential for a prolonged conflict, particularly one that disrupts energy infrastructure and crude oil supplies from Iran, has raised concerns about the impact on global oil markets.

Bank of America's research note outlines a scenario in which the price of global benchmark Brent crude could surge to USD130 per barrel in the second quarter of this year if hostilities escalate and Iranian oil production experiences significant declines. The note also suggests that United States crude oil prices could reach USD123 under similar circumstances.

The bank's projections are based on the assumption that Iranian oil production could fall by up to 1.5 million barrels per day (bpd) if a conflict disrupts operations. Iran, a key member of the Organization of the Petroleum Exporting Countries (OPEC), currently produces approximately 3.2 million barrels of oil per day, according to data from the International Energy Agency (IEA).

Furthermore, the research note highlights the potential for even higher oil prices if disruptions extend beyond Iran, resulting in the loss of 2 million bpd or more from the global market. In such a scenario, oil prices could spike by USD50 per barrel, with Brent eventually stabilizing around USD100 by 2025, while United States benchmark West Texas Intermediate (WTI) could settle at USD93.

The Bank of America's warning underscores the significant geopolitical risks posed by escalating tensions in the Middle East and the potential implications for global energy markets.

As Israel and Iran continue to exchange threats and military actions, the specter of a wider conflict looms large, prompting concerns about the stability of oil supplies and prices in the months ahead.



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