Oil prices stable above $90 as markets continue to assess impact of Israel-Hamas war 

On Monday, Brent crude futures stabilized above $90 per barrel, maintaining the level they had reached on the previous Friday as investors continued to closely monitor the Israel-Hamas war to see if it will escalate further. 

At 11:20 AM GMT, Brent futures showed a marginal decrease of 4 cents, equivalent to 0.04%, settling at $90.85 per barrel. Meanwhile, West Texas Intermediate (WTI) crude — the oil benchmark in the U.S. — experienced a modest uptick of 12 cents, or 0.14%, reaching $87.81 per barrel. 

During the previous week, both benchmark crude oil prices saw significant gains, with a nearly 6% increase on Friday alone. This surge led to a 7.5% rise in Brent prices for the week and a 5.9% increase in the price of WTI. 

Analysts quoted by Reuters have said that the ongoing war between the Islamist group Hamas and Israel presents one of the most significant geopolitical risks to the oil markets since Russia's invasion of Ukraine last year.  

Oil prices hit 10-month highs in late September as Saudi Arabia and Russia announced voluntary supply cuts until the end of 2023, before macroeconomic concerns pulled them dramatically lower again last week. 

Israeli airstrikes on Gaza escalated on Monday, as per coverage from the New York Times, after attempts to arrange a ceasefire in southern Gaza, allowing foreign passport holders to depart and aid to enter the Palestinian enclave, appear to have failed. While Israel readies itself for a potential ground invasion into the Gaza Strip, concerns are rising due to escalating tensions along its northern border with Lebanon, raising the possibility of the conflict expanding. 

On Monday, Israel's military and its defense ministry announced plans to evacuate 28 communities located within two kilometers of the Lebanese border. 

In light of the growing concerns about the conflict's intensification, U.S. Secretary of State Antony Blinken is set to return to Israel on Monday to talk about "the way forward”. 

Crude oil news: U.S. sanctions owners of tankers carrying Russian oil 

In another development, the United States last week imposed the first sanctions against the owners of vessels transporting Russian oil that exceeded the G7's price limit of $60 per barrel, according to a report by the Financial Times. This move aimed to address gaps in the mechanism established to restrict Moscow's revenue from its energy exports. 

"The sudden decision on tightening up of sanctions on ship owners carrying Russian crude over the $60/barrel limit by the US started to niggle and so did the Russian/Saudi meeting concluded by President Putin stating that OPEC+ were achieving 'stability'," PVM analyst John Evans told Reuters on price rises at the end of last week. 

Russian Deputy Prime Minister Alexander Novak echoed Putin's sentiment on Monday, saying Russia believes it is important to keep working in OPEC+ to stabilise the market. 

Oil price forecast: Projections differ as geopolitical uncertainty takes hold 

The U.S. Energy Information Administration (EIA) revealed its latest Brent spot average price forecasts for 2023 and 2024 in its most recent short term energy outlook (STEO), which was released on October 11  

According to the STEO, the EIA now sees the Brent spot price averaging $84.09 per barrel this year and $94.91 per barrel next year.  

In the STEO, the EIA projected that the Brent spot price will average $90.65 per barrel in Q4 2023, $94.64 per barrel in Q1 2024, $96 per barrel in Q2 2024, $95 per barrel in Q3 2024, and $94 per barrel in Q4 2024. 

“The Brent crude oil spot price increased over much of the past month before falling below $90 per barrel during the first week of October,” the EIA noted in its October STEO. 

“We forecast crude oil prices will rise in the coming months, reflecting our expectations of tightening balances in global oil markets.” 

According to a separate report submitted to industry website Rigzone last week, Standard Chartered provided its updated projections for the ICE Brent crude oil prices. They anticipate an average of $98 per barrel in 2024, $109 per barrel in 2025, and $128 per barrel in 2026. 

In their report, Standard Chartered's quarterly breakdown reveals expectations of an average price of $93 per barrel in Q4 2023, $92 per barrel in Q1 2024, $94 per barrel in Q2 2024, $98 per barrel in Q3 2024, $106 per barrel in Q4 2024, and $107 per barrel in the first quarter of 2025. 

In another report shared with Rigzone earlier this month, BMI, a Fitch Solutions company, anticipated the Brent oil price to average $83 per barrel in the current year, and maintain that level in both 2024 and 2025. They further predicted an average of $81 per barrel for 2026 and 2027. 

A Bloomberg Consensus featured in the same report saw Brent prices to average $81 per barrel in 2023, $84 per barrel in 2024, $81 per barrel in 2025, $77 per barrel in 2026, and $72 per barrel in 2027. Notably, BMI is a contributor to the Bloomberg Consensus. 

At the time of writing, the continuous Brent futures contract on the ICE was trading at $90.36 (down 0.58% on the day), while the continuous WTI contract on the NYMEX was down 0.50%, trading at $87.25, as per MarketWatch data. 

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