Barclays: Oil Prices Could Reach $80 per Barrel

SadaNews Economy - Barclays Bank stated that Brent crude could rise to around $80 per barrel in the event of significant supply disruptions, as tensions between the United States and Iran remain high.

The bank said, "While it is entirely possible that escalation does not lead to supply interruptions, and that the risk premium of $3-5 per barrel in oil prices fades quickly, a disruption of supply by one million barrels per day would increase doubts about the widely expected surplus and push Brent to $80 per barrel."

Oil prices rose by about 2 percent on Friday, as traders anticipated supply disruptions after nuclear talks between the United States and Iran failed to reach an agreement. Brent crude settled at $72.48 per barrel.

On Saturday morning, the U.S. and Israel launched an attack on Iran, which U.S. President Donald Trump said would be "large-scale" and last for days.

President Trump expressed on Friday his disappointment regarding U.S. negotiations with Iran over its nuclear program and warned that "sometimes you have to use force."

Barclays stated in a memo: "Our view that geopolitical tensions still pose asymmetric risks to oil prices is largely based on recent history, which supports the idea that the risk premium associated with these events fades."

On the other hand, if no significant supply disruptions occur and Iran's reactions to any U.S. strikes do not match the heated rhetoric, Barclays stated that oil prices could drop by three to five dollars per barrel, assuming all other factors remain unchanged.

The bank also warned that the market is experiencing structural contraction, with declining spare capacity, shrinking inventories, and strong demand.