Commerzbank’s Norman Liebke and colleagues highlight that Brent remains volatile as Middle East tensions and shipping disruptions through key chokepoints constrain supply. They note that OPEC+ is expected to raise September output targets modestly, but stress this depends on the Strait of Hormuz staying open. The bank concludes Brent prices are likely to stay elevated in coming weeks.

Middle East tensions dominate oil outlook

"Overall, it remains clear that the regional escalation of the Middle East conflict puts additional pressure on the global oil market. As a result, developments in the Middle East are likely to remain a key driver of commodity market sentiment and oil prices in the weeks ahead."

"Given this situation and the absence of clear de-escalation signals, oil prices are likely to remain elevated for the time being. However, recent weeks have demonstrated that even tentative progress in US-Iran relations can exert substantial downward pressure on prices."

"In addition, there is news from OPEC: This Sunday, the seven core OPEC+ countries will meet and are expected to raise the production targets for September once again by around 188,000 barrels per day, before likely pausing further increases."

"Yet the implementation of previously announced production hikes ultimately depends on the Strait of Hormuz remaining open and Gulf producers being able to restore export flows."

"This underlines the increasingly tight inventory situation in the US, which is likely to limit the scope for crude oil exports."

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