Brent Crude Prices May Soar to $120-$125 Amid Ongoing Middle East Supply Disruptions
A senior oil analyst at Sparta Commodities warns that Brent crude prices could reach $120-$125 per barrel if supply disruptions persist in the Middle East. The threat of demand destruction looms, even at current price levels.
The attack on the Yanbu or East-West pipeline has already taken out around 4% of global supply, leading to tightness in the market. Analyst Abhishek Kumar points out that the immediate supply buffer from the affected infrastructure could last only five to seven days, while damage could take two weeks to repair.
Kumar estimates that if the disruption continues for four weeks, the market could face a supply shortfall of 3-4 million barrels per day. The analyst also notes that an alternative route through the Strait of Hormuz is available, but risks and limited availability of very large crude carriers (VLCCs) could make it difficult to move the additional crude.
Kumar warns that fuel prices have already risen sharply across major markets, with US retail diesel prices up nearly 60% and European Union and UK prices rising by 30-40%. Diesel prices in some Asian countries have increased by more than 70%, while others have seen rises of over 30%.