JD - Oil prices could spike to $80 a barrel if a major supply disruption occurs amid heightened tensions between the United States and Iran, according to Barclays bank.
Barclays noted that while it is entirely possible that any escalation will not lead to supply disruptions, a supply outage of one million barrels per day would fuel uncertainty about the widely anticipated surplus and propel Brent crude to $80 a barrel.
The bank cautioned that the market is experiencing a structural squeeze, characterized by declining spare capacity, shrinking inventories, and strong demand.
Oil prices had already risen by approximately 2% on Friday, as traders anticipated potential supply disruptions following inconclusive nuclear talks between the United States and Iran. Brent crude settled at $72.48 a barrel.
Barclays stated in a note that their rejection of the view that geopolitical tensions continue to pose asymmetric risks to oil prices is primarily based on recent history, which supports the fading of the risk premium surrounding such events.
Conversely, if no significant supply disruption occurs and Iran's reactions to any U.S. strikes do not align with heated rhetoric, Barclays indicated that oil prices could fall by three to five dollars per barrel, assuming all other factors remain constant.
