According to OCBC FX analysts Sim Moh Siong and Christopher Wong, oil prices have seen a sharp increase, with Brent crude rising toward multi-week highs around the mid-$60s level. This rally is driven by escalating unrest in Iran combined with the threat of new U.S. tariffs on nations trading with Tehran, both of which have boosted fears of supply disruptions and added a geopolitical risk premium to the market.
Oil hit a two-month high as markets grew concerned over potential output losses from Iranian civil unrest, which could threaten up to 3.5mb/d of production, including nearly 2mb/d that reaches global markets. Furthermore, President Trump intensified pressure by announcing a 25% tariff on goods from countries “doing business” with Iran. While heightened geopolitical risk could push Brent toward $70/bbl in the near term, the analysts note that OPEC+’s ability to increase supply should limit the risk of a sharp price spike.
Despite current price action, OCBC maintains a subdued outlook for Brent, forecasting it to bottom near $59/bbl by year-end, pending clarity on Venezuela’s new government and resource policy. Meanwhile, OPEC’s pause in quota hikes provides a soft floor for prices in the high-$50s.
