In response to news that Israel has launched an attack on Iran, Al Salazar, director at Enverus Intelligence® Research (EIR), released this reaction explaining the significance on oil prices:
“Oil prices have spiked on the increased probability that an oil supply disruption will occur due to the Iran-Israel conflict. Market pundits have suggested that a geopolitical premium is now embedded in today’s oil price.
EIR maintains that the fair value of oil should be in low $80s, if based purely on OECD crude and product stock levels. Furthermore, the market has forgotten the U.S. SPR remains ~200 MMbbls below 2021 levels.
Geopolitical premium? Perhaps in options pricing. However, in terms of absolute price, we think not. EIR views the recent price moves as a knee-jerk reaction much like what occurred last October, the last time tensions boiled over. Should there be no material impact to oil supply or infrastructure, the recent uptick in oil prices, will prove transitory.
EIR believes Brent prices had been discounted up till the recent tensions, due to expectations of weaker demand given global trade uncertainty and increased OPEC supply. EIR maintains that softer balances will come 2H25 and that Brent prices will average $65/bbl for the rest of the year.”
About Enverus Intelligence® Research
Enverus Intelligence ® | Research, Inc. (EIR) is a subsidiary of Enverus that publishes energy-sector research focused on the oil, natural gas, power and renewable industries. EIR publishes reports including asset and company valuations, resource assessments, technical evaluations and macro-economic forecasts; and helps make intelligent connections for energy industry participants, service companies and capital providers worldwide. Enverus is the most trusted, energy-dedicated SaaS company, with a platform built to create value from generative AI, offering real-time access to analytics, insights and benchmark cost and revenue data sourced from our partnerships to 95% of U.S. energy producers, and more than 40,000 suppliers. Learn more at Enverus.com.
