(Bloomberg) -- The impact of the Israel conflict on oil markets will be long-term, Citigroup Inc. analyst Ed Morse said, citing the risk Saudi Arabia may not ease its production cuts as some had expected as a result of the war.
There's also a chance of “more stringent” US sanctions on Iran, Morse, Citi's global head of commodities research, said during a Bloomberg TV interview. Iran has congratulated Hamas for its operation while denying involvement.
Oil prices surged more than 4% on Monday after a surprise attack on Israel by Hamas brought renewed instability to the Middle East. Production cuts led by Saudi Arabia and its allies have tightened supplies even though investors remain on edge about demand and the outlook for the global economy.
Morse expects the US will now push companies to boost output in Venezuela by a “couple of hundred thousand barrels a day,” with a renewed focus on production from the group of so-called fragile five that includes Iraq, Libya, Nigeria and Venezuela, as well as Iran.
--With assistance from Guy Johnson, Alix Steel and Julia Fanzeres.
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