Crude Oil Price Likely To Stay Between $65 And $70: Kpler Analyst Muyu Xu

Oil prices eased to their lowest levels in two weeks on Tuesday after the announcement of a ceasefire between Iran and Israel by US President Donald Trump. The announcement of the ceasefire has put an end to the speculations and fears of a spike in crude oil prices over potential disruptions in fuel transport through the Strait of Hormuz by Iran.

In the short term, crude oil prices are expected to stabilise between $65 and $70 per barrel, Muyu Xu, senior crude oil analyst at Kpler, told NDTV Profit. 

“From now on, I think the market will be refocusing on the fundamentals. So, oil prices will still find some support because right now, we are just about to kick in the peak summer demand season and the traffic fuel demand will be supported. So we do think the oil prices might stabilise above $65, maybe hovering between $65 to $70 in the short term,” she said in an interview with NDTV Profit on Tuesday.

The market had been watching crude's performance amid the escalating conflict, particularly following the US bombing of Iranian nuclear sites. The start of the conflict pushed the risk premium to $10 per barrel. However, that premium has now largely dissipated.

"The drop in oil prices is not something really surprising. It's just a matter of time before the risk premium dissipates. The thing is, there's no single barrel of oil being removed from the market. The vessels still come in and out of the Strait of Hormuz and they were doing their job,” she said.

Xu described the earlier price hike as a "knee-jerk reaction”. She noted that while some shipping companies might have initially been more cautious, business operations largely remained normal. The market is now "pricing out" the risk that was previously priced in.

She expects "sporadic missile exchange" between Israel and Iran in the coming days, as both nations seek to "save face" before starting potential diplomatic negotiations. Nevertheless, she believes the market's primary attention will now return to underlying fundamentals.

Meanwhile, oil prices settled more than 7% lower on Monday, losing more than $5 per barrel after the announcement of a ceasefire between Iran and Israel. Brent crude futures ended $5.53, or 7.2%, lower at $71.48 a barrel, while US West Texas Intermediate crude (WTI) eased $5.53, or 7.2%, to $68.51, according to a Reuters report.