Energy Market Outlook: Middle East Conflict Unlikely to Trigger Oil Crisis

Oxford Economics' Head of Energy Forecasting, Bridget Payne, has indicated that a full-scale oil crisis is unlikely despite the ongoing Middle East conflict, due to sufficient market supply. According to Jin10, Payne noted that Iran is not expected to experience severe and prolonged supply disruptions. Current projections assume a reduction in crude oil supply by an average of 4 million barrels per day in the next quarter. The forecast for Brent crude oil prices in the second quarter is set at $79 per barrel, which is $15 higher than the February baseline prediction. Prices are expected to decline as supply recovers by the end of the quarter. Payne added that the spare capacity in Saudi Arabia and the UAE could offset the shortfall caused by Iran's reduced output, although alternative trade routes can only reroute about one-third of the normal oil flow through the Strait of Hormuz.