Oil: Conflict-driven spike and path for prices – BNY

BNY's Head of Markets Macro Strategy Bob Savage highlights how Middle East tensions and a Saudi refinery hit have driven Oil prices 7–10% higher, with European gas also surging. He notes that Saudi ports still load tankers and OPEC+ plans output increases. Savage outlines scenarios where WTI could normalize back to $65–$70 or rise toward $85 depending on conflict duration.

WTI scenarios hinge on conflict length

"Oil prices have risen by 7-10%, gold is up 2-3% and USD is 0.6% higher, while bonds have been bought and then sold."

"While the Saudi refinery hit changes the calculus, Saudi ports are still loading tankers and OPEC+ is resuming production increases from April to offset the disruption in the Strait of Hormuz."

"The key for energy prices is the duration of the conflict and the speed with which insurance and shipping can resume."

"If the conflict lasts a week, the price action in crude can normalize back to $65-$70/barrel WTI, but if it lasts a month the risk of a 15-20% rise to $85/barrel WTI increases."

"Inventories and the speed of a switch to new production outside the Gulf will become key factors"

"The moves in natural gas in the EU are far more dramatic and merit more attention from an economic shock standpoint."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)