Oil prices could spike more than 60 per cent but Australia\u2019s largest bank also forecasts Iran and the US will \u201coverplay\u201d their hands in controlling the Strait of Hormuz.<\/p>\n
In Commonwealth Bank analysis released on Wednesday, head of commodities Vivek Dhar said the bank forecast the war would continue at its current intensity for two months, while global oil markets had 10 weeks before oil inventories were depleted \u2013 a scenario that could spike the current $US92 Brent crude futures price by 66 per cent up to $US150 a barrel.<\/p>\n
\u201cThe ongoing US\u2011Iran tensions and negotiations will likely mean the path ahead will be a combination of reopening and reclosing the Strait of Hormuz,\u201d Mr Dhar said.<\/p>\n
\u201cGiven global oil and refined product inventory buffers are now more limited than before the Iran war, the stage is then set for markets to price in physical shortfalls that force developing Asian economies to reduce demand when the Strait of Hormuz is closed.<\/p>\n
\u201cIf global inventory depletion levels are reached, we believe Brent oil futures could rise as high as $US150\/bbl.\u201d<\/p>\n
In Australia, every $US10 increase in the price of a barrel of crude oil generally adds about 10c per litre to fuel prices.<\/p>\n
Brent crude futures fell to $US70a barrel in early July as a ceasefire began and oil tanker traffic through the strait reached about 40 per cent of pre-war levels.<\/p>\n
As of Wednesday Australian time, the US has bombed Iranian military targets for an 11th consecutive night, and Yemen\u2019s Houthi rebels have blockaded Saudi oil ships.<\/p>\n
The Houthi blockade is on the Bab el-Mandeb strait, through which seven million barrels of oil transited each day in June compared with about four million barrels per day before the war. Other avenues are allowing Saudi oil exports though.<\/p>\n
Australian fuel prices instantly climbed 16 cents per litre on July 1 when the federal government fuel excise subsidy was reduced. Brent crude futures have risen about 29 per cent since then.<\/p>\n
Commonwealth Bank analysis predicts both the US and Iran will reopen the Strait of Hormuz if oil prices get too high.<\/p>\n
\u201cHowever, the risk to our forecast is tilted to the upside because there is a chance that inventory depletion is realised inadvertently as US or Iran overplay their hand in trying to control the Strait of Hormuz,\u201d Mr Dhar said.<\/p>\n
\u201cThere are other upside risks to consider too, especially if fighting between US and Iran intensifies to the point where oil production and infrastructure in the Middle East is attacked.\u201d<\/p>\n
Trading at $US92 at midday on Wednesday AEST \u2013 the highest intraday mark since June 11 \u2013 Brent futures are expected to track between $US70-$100 a barrel in the second half of the year, $US60-$80 in the first half of 2027 with new supply from OPEC+ countries, and $US50-$70 in the second half of 2027, as new pipelines bypassing the Strait of Hormuz start operating.<\/p>\n","protected":false},"excerpt":{"rendered":"Oil prices could spike more than 60 per cent but Australia\u2019s largest bank also forecasts Iran and 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