Crude Oil May Climb To US$85 Per Barrel On Geopolitical Risks, Says Analysts

KUALA LUMPUR, June 23 (Bernama) -- Crude oil prices are expected to rise towards US$85 per barrel in the near term, driven by supply-side risks stemming from recent geopolitical developments, according to CIMB Securities Sdn Bhd.

It stated that volatility is likely to remain elevated, adding that a disruption of 500,000 barrels per day in global supply could historically lead to a price surge of around US$10 per barrel.

“International sanctions imposed on Iran in 2011-2012 led to a supply loss of 1.4 million barrels per day, resulting in a US$30 per barrel increase in crude prices during that period.

“That said, the current global oil market is better cushioned by available spare capacity,” it said.

CIMB Securities noted that the Organization of the Petroleum Exporting Countries (OPEC+) currently holds an estimated 5.7 million barrels per day of excess capacity, with Saudi Arabia and the UAE accounting for roughly 4.2 million barrels per day.

However, it assessed that a key vulnerability lies in the fact that the bulk of the oil supply is exported via the Strait of Hormuz.

“In our view, should the proposed closure of the Strait of Hormuz materialise, the risk premium could surge, potentially pushing Brent prices above US$100 per barrel,” it said.

CIMB Securities noted that while the Iranian Parliament’s vote reflects a growing political push within the country to adopt a hardline stance, it is essential to recognise that any decision to close the Strait of Hormuz ultimately rests with the Supreme National Security Council, Iran’s highest authority on security and strategic matters.

“Should this measure be enacted, it would significantly elevate geopolitical risk in the Middle East region, with potential repercussions for global oil supply chains,” it stated.

The global oil supply is currently projected to grow by 1.5 per cent to 104.35 million barrels per day in 2025, based on estimates from the US Energy Information Administration.

The Strait of Hormuz facilitates the transit of approximately 20 per cent of global oil consumption, underscoring its strategic importance.

Asia is particularly exposed, with China, India, Japan, and South Korea being the top destinations for crude oil moving through the Strait of Hormuz to Asia, collectively accounting for 69 per cent of crude oil and condensate volumes transported through the strait in 2024.

CIMB Securities opined that any disruption to these flows could drive a renewed surge in oil prices, with inflationary spillovers extending across global economies.

Meanwhile, Public Investment Bank Bhd (PIVB) said the uncertainty in the Middle East is likely to cause a spike in oil prices as the region contributes 30 per cent of the world’s total output, with Iran being the third-largest OPEC producer.

It said that if there is no material disruption to the global oil supply with the Strait of Hormuz remaining accessible, this may well be short-lived, as there is still ample supply of oil in the market, while global demand could weaken due to a slowdown in international trade following the increase in tariffs.

“Nonetheless, given the uncertainty and risk of escalation, oil prices are likely to surge in the immediate term, while investors would rush to safe-haven assets and avoid risky investments such as equities,” it said.

PIVB added that while the US Consumer Price Index (CPI) remains under control, partly due to low energy prices, a protracted conflict in the Middle East could potentially lead to a sustainable rise in energy prices, increasing the likelihood of the US economy slipping into stagflation in the second half of 2025.

-- BERNAMA