Oil Prices Unlikely to Hit Triple Digits Amid Middle East Tensions

Oil prices are expected to remain volatile due to ongoing tensions in the Middle East, but a return to triple-digit crude prices is unlikely according to Vincent Lau, head of equity sales at Rakuten Trade. He believes that both the United States and Iran want to avoid a prolonged conflict as it would negatively impact their economies.

Lau expects Brent crude oil to retreat to a more sustainable price range of US$70 to US$80 per barrel throughout the year. This is because Iran had indicated that it will stop its attacks if the US also refrains from striking, and US President Donald Trump is unlikely to allow oil prices to revisit US$120 per barrel, especially with the US midterm elections approaching.

Iran's ability to generate revenue has been limited due to restrictions on its oil exports. Both sides are unwilling to see oil prices remain above the US$100 per barrel level. Hong Leong Investment Bank Research also shares this view, stating that a renewed surge towards US$120 per barrel would require a material escalation disrupting multiple regional export routes or critical energy infrastructure.