Petrobas CEO Says War in Middle East Will Cause Volatility and Speculation
October 10, 2023
The energy markets remain concerned about the stability of oil supply in the Middle East as ongoing geopolitical conflict continues to develop. This continuing event will keep the market on edge and keep volatility high.
Morgan Stanley said neither Israel nor its direct neighbors are large oil producers, “hence, we judge the near-term risk to oil supply as limited.”
Barclays said the conflict will lower expectations of a potential normalization of Israel-Saudi relations, which could drive a less aggressive oil policy from the kingdom. It also stated that it sees a potential slowdown in Iranian exports, which have increased this year.
Societe Generale said it expects the market to start embedding a risk premium in the front of the curve around $5-$10 in light of the military conflict in the Middle East. It said it is “worth pointing out that it is the mere threat of safe passage that has an immediate effect on vessel insurability and hence physical crude flows.”
The CEO of Brazil’s Petrobras, Jean Paul-Prates, said the conflict between Israel and the Palestinian Islamist group Hamas is likely to lead to higher volatility and speculation in oil markets. He said that the increased oil volatility would help show how Petrobras’ current fuel pricing policy is “working well”’ noting that the company will probably be able to mitigate such effects.