Oil Prices Soar Amid Fading Hopes for Middle East Peace
Oil prices have surged above $91 per barrel amid fading hopes for a deal to end the war in the Middle East, with Iran declaring it will adopt a more offensive stance and the US ruling out extending a ceasefire agreement.
Brent crude futures rose 39 cents, or 0.4%, to $91.26, while US West Texas Intermediate crude futures jumped 51 cents to $85.31 a barrel, extending gains of over 5% last week following attacks on tankers in the Strait of Hormuz and an attack on a Saudi Aramco refinery.
The Iranian government has stated that it will shift to a 'fully offensive' military posture as efforts to negotiate a permanent end to the war with the US have stalled. This move has sparked concerns about energy supply, particularly given the strategic importance of the Strait of Hormuz, where Iran is negotiating an agreement with Oman to manage shipping.
Goldman Sachs warns that Brent could rise to $120 a barrel if shipping disruptions through the Strait of Hormuz continue, while JPMorgan estimates that every additional month of disruption could add around $7 to $8 a barrel to Brent prices. Meanwhile, Goldman Sachs expects tensions in the Middle East to eventually ease under its base case, forecasting average monthly Brent prices to reach around $114 a barrel if disruptions last for three months.