OCBC BANK MAINTAINS BASELINE FORECASTS FOR WTI, BRENT OIL PRICES AT US$79, US$85 PER BARREL IN 2024

KUALA LUMPUR, April 22 (Bernama) -- OCBC Bank (Malaysia) Bhd has maintained its baseline forecasts for West Texas Intermediate (WTI) and Brent oil prices to average US$79 (US$1=RM4.78) and US$85 per barrel in 2024 despite rising geopolitical tensions.

OCBC Bank, in its commodity report, said it sees the risks “becoming fairly binary at this point of a de-escalation or escalation in tensions, at least over the coming weeks.” It said under a scenario of de-escalation, global diplomatic efforts will take hold, while direct Iran-Israel attacks will be contained but tensions in Gaza may continue.

"The geopolitical risk premium that has been priced into Brent oil prices over the last two weeks would likely start to unwind as the threat of broader regional conflict de-escalates.

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"This outcome is similar to our base case under which we forecast Brent oil prices falling back to US$90 per barrel by end-June 2024. That said, we would expect Brent oil prices to remain elevated around US$86 per barrel in the second quarter of 2024,” it added.

Under the alternative scenario of an escalation to a broader regional conflict, OCBC Bank said it did not rule out a series of tit-for-tat attacks between Israel and Iran.

"Brent oil prices could top US$100 per barrel, touching US$120 per barrel, reflecting fragile risk sentiment and market edginess of every incident sparking a wider escalation.

"Under these circumstances, further sanctions on Iran and trade routes blockages in the Strait of Hormuz cannot be ruled out," it added.

OCBC Bank said the United States, which has already issued new sanctions on Iran on April 18 and April 21, will issue further sanctions to constrain the government. "The situation remains fluid and we will continue monitoring implications closely. From a macroeconomic standpoint, we will closely monitor whether oil prices will rise beyond US$100 per barrel and more importantly, persist at those levels." 

-- BERNAMA