Banks raise Q4 oil forecasts as Iran conflict persists
Oil futures edged higher Thursday as Middle East crude exports continued to recover toward prewar levels, easing some immediate supply concerns even as risks around regional shipping and the U.S.-Iran conflict persisted, The Wall Street Journal reported. December Brent crude futures gained 0.5% to $98.56 a barrel, while West Texas Intermediate futures rose 0.4% to $88.70. Both contracts traded lower initially before rebounding.
Major banks have raised their oil-price forecasts as the Iran conflict and the risk of renewed supply disruptions remain unresolved. A Wall Street Journal survey of projections from banks including Goldman Sachs, J.P. Morgan and Morgan Stanley put Brent at an average of $90.22 a barrel in the fourth quarter and WTI at $85.47, up from previous estimates of $78.92 and $74.62, respectively.
Middle East crude exports have rebounded to 17.5 million barrels a day on a 10-day average, or 98% of prewar levels, J.P. Morgan analysts said. Restored flows through Saudi Arabia’s East-West pipeline and greater use of alternative export routes supported the recovery, according to the bank.
Shipping analytics firm Kpler reported that, excluding Iran, at least 16.5 million barrels a day of crude left the Middle East Gulf region in September, matching its prewar average. Around 40% of those exports bypassed the Strait of Hormuz, up from 17% before the war, with 23% loading outside the strait along the Gulf of Oman and another 17% leaving through the Red Sea. The remaining 60% crossed Hormuz, much of it using shuttle tankers and ship-to-ship transfers.
U.S. crude inventories also rose unexpectedly last week. Commercial crude stocks increased by 900,000 barrels to 427.3 million barrels in the week ended Sept. 25, according to the U.S. Energy Information Administration, while analysts surveyed by The Wall Street Journal had expected a 200,000-barrel decline. Refinery utilization fell to 92.5% from 94% a week earlier. Gasoline stocks fell by 1.7 million barrels and distillate inventories dropped by 2.3 million barrels, leaving both well below their five-year seasonal averages.
Earlier MSI reporting tracked how renewed U.S.-Iran fighting kept the Strait of Hormuz effectively shut to commercial traffic in July, after markets rebounded in late June when the two sides agreed to resume talks following weekend strikes.