Brent crude could rise to $120-$150 a barrel if disruptions to Middle East supplies persist, according to Iman Nasseri, senior vice president, Middle East & Asia at FGE.
Oil rose for a second day on concerns over Middle East supply disruptions, with a critical Saudi Arabian pipeline still offline. Brent rose above $107 a barrel, moving towards Friday's intraday high of just below $110, the highest level since May.
Nasseri told NDTV Profit that the loss of another 2 million to 4 million barrels per day of crude supply would put further pressure on the market. He said physical crude barrels are already trading at $120-$130 a barrel, depending on the location.
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"If the physical barrels remain offline," Brent could rise to $120-$150, Nasseri said.
He said the physical market is already signalling a shortage of barrels at risk because prompt cargoes are trading at a premium of $20-$30. He expects futures prices to move towards physical prices if the supply disruption continues.
"The physical barrels are now in the order of $120 to $130 depending on which part you pick," Nasseri said.
He said the market expects the Saudi East-West pipeline outage to be short-lived, but further attacks could increase concerns over the duration of the disruption. If the pipeline remains offline for more than two weeks, the Brent futures price could converge with physical crude prices, Nasseri said.
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The Saudi East-West pipeline has been shut as a precautionary measure. Nasseri said the market is currently pricing in an outage or lower crude deliveries for two to three weeks. Storage at Yanbu could support loading for the next 15 to 25 days, he said.
The pipeline disruption comes as oil supplies across the Middle East face wider risks. Shipping through the Strait of Hormuz has also come under attack, while oil fields have been shut in.
Brent has risen more than three-quarters this year as the US-Iran war spread across the energy-rich Middle East, according to the background provided for the interview.
Jonathan Barratt, chief investment officer at ETO Markets, said crude prices could reach $125-$130 a barrel.
Asked by NDTV Profit whether those levels were possible, Barratt said: "Very, very possible."
Barratt said oil prices are likely to remain volatile while the market waits for a resolution to the conflict between the US and Iran. He said the risk premium in oil contracts would remain as long as there is no resolution.
"If interest rates do go higher, that's going to soften economic demand," Barratt said, adding that weaker demand could put pressure on oil prices.
Tim Waterer, chief market analyst at KCM Trade, said oil prices were among several headwinds facing risk assets, along with high bond yields and concerns over artificial intelligence spending.
Nasseri said the supply situation would remain the key factor for crude prices. He linked attacks on Saudi assets, disruptions to flows through the Strait of Hormuz and threats to passage through the waterway to the broader US-Iran conflict.
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