Provided there is no renewed escalation of tensions in the Middle East, oil prices are likely to retreat further due to weaker fundamental data, Commerzbank commodity analyst Carsten Fritsch notes.
Oil prices are likely to fall further
“The oil price fell significantly this week after a US daily newspaper reported that Israel would spare Iran’s oil and nuclear facilities in the pending retaliatory strike. This has made a further escalation of the conflict between Israel and Iran, and resulting supply disruptions in the oil market, less likely.”
“Unless there are developments that lead to a reassessment, the oil market is likely to focus more on weaker fundamentals and the looming oversupply next year. The latter could be considerable if oil production in some OPEC+ countries is gradually increased from December as planned. The market is now waiting for signals whether this production increase will actually materialize or whether it will possibly be postponed again.”
“A decision would have to be taken and communicated by early November. As that deadline approaches, the market will wait for statements from the countries concerned, and in particular from Saudi Arabia. If these are not forthcoming, oil prices are likely to fall further.”
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