UBS: If the Iran conflict persists, oil prices could rise to $90 per barrel

Investing.com - UBS analysts say that if the ongoing Middle East conflict continues to disrupt shipping through the Strait of Hormuz, oil prices could rise above $90 per barrel.

Track oil prices with InvestingPro

On Friday, crude oil prices are expected to see a significant weekly increase as traders remain concerned that conflicts between Iran and the US-Israel coalition could block the vital Strait of Hormuz, through which about 20% of the world’s oil supply is transported.

To ease some concerns, the US announced it would allow Russian oil to be sold to India within 30 days. According to Reuters, the US Treasury is also expected to announce measures aimed at controlling energy prices through financial markets.

Analysts including Mark Haefele and Giovanni Staunovo wrote in their report that they believe current oil prices are not in a “stable equilibrium.”

They stated, “If shipping disruptions persist or infrastructure suffers further damage, prices could rise, potentially exceeding $90 per barrel.”

With the prospect of rising US gasoline prices, some investors are worried that prolonged conflict could trigger a surge in inflationary pressures, possibly delaying the Federal Reserve’s potential rate cuts later this year. US bond yields have already risen, dragging down stock markets.

However, UBS analysts believe that prices would need to stay high for several months to have a “substantial impact on growth or inflation.”

They added that if hostilities cease, oil prices could fall back, with Brent crude returning to the “$60 to $70 per barrel range.”

Signs of an imminent easing of the conflict are scarce. Media reports indicate that Israel launched attacks on Hezbollah targets in Lebanon and struck Tehran on Friday, while Iran’s Revolutionary Guard launched drones and missiles toward Tel Aviv.

This article was translated with the assistance of artificial intelligence. For more information, please see our Terms of Use.