ISLAMABAD
Crude oil price volatility climbed dramatically on Friday after tensions between Israel and Iran escalated; however, prices came down after surging around five percent in the early trade.
As of 1350 hours GMT, Brent, the international benchmark for two-thirds of the world’s oil, slipped $0.02 (-0.02 percent) to reach $87.09 a barrel. However, the West Texas Intermediate (WTI), the main oil benchmark for North America, went up by $0.10 (+0.12 percent) to $82.83 a barrel.
On the other hand, the price of Arab Light increased by $0.87 (+0.98 percent) to reach $89.84 a barrel. Similarly, the price of Russian Sokol increased by $0.76 (+0.94 percent) to $81.49 a barrel. On the other hand, the price for Opec Basket decreased by $2.29 (-2.55 percent) to $97.35 a barrel.
The drastic seesawing of oil prices in recent trading sessions reflects the uncertainty surrounding the Israel-Iran conflict, with initial reports of Israeli strikes on Iranian soil ratcheting up Brent above $90 per barrel, only to see them plunge back to $86 per barrel following Tehran’s dismissal of their impact. The reimposition of oil sanctions on Venezuela was placed on the back burner by the market as geopolitics have reigned supreme lately.
Brent reached $92.18 on Friday last, its highest level since October on concerns that Iran would respond to Israel’s April 1 strike on its embassy compound in Damascus. But prices retreated on Monday after the Iranian counter-attack on Israel over the weekend proved less damaging than anticipated.
The oil price rally has lately lost some steam, with WTI for May delivery and June Brent futures slipping more than 5% since Friday after the Energy Information Administration (EIA) released bearish weekly data that triggered demand concerns.
According to the EIA, crude inventories rose 5.84 mb w/w and oil product inventories rose 6.57 mb; however, the builds relative to the five-year average were modest, at just 0.11mb for crude oil and 1.24mb for products.
Whereas the short-term oil price outlook appears murky, leading oil agencies remain largely bullish about the long-term outlook. Last week, the International Energy Agency (IEA) published its latest monthly Oil Market Report (OMR), including its first detailed 2025 forecast.
The Paris-based energy watchdog predicted that global oil demand in 2025 demand will be 1.147 mb/d higher than 2024 levels, higher than the 1.0 mb/d estimate it had released in June 2023. Other leading agencies have predicted even higher demand growth in 2025: the EIA forecast is 1.351 mb/d, Standard Chartered’s forecast is 1.444 mb/d while the OPEC Secretariat has predicted a 1.847 mb/d increase in demand.
