Limited US strikes on Iran could quickly erase $3–4/bbl geopolitical oil premium, Barclays says

Jan 16 (Reuters) - Outlining a base-case scenario, Barclays predicted any U.S. strikes would likely target limited objectives and draw only a token response from Iran, causing the current $3–$4 per barrel geopolitical risk premium in oil prices to fade quickly.

However, the bank warned that more ambitious U.S. objectives could destabilize the region and push prices higher, accelerating a move toward its medium-term view of $80 a barrel given slowing non-OPEC+ supply growth and resilient demand.

Oil prices rose over 1% on Friday on short-covering ahead of a three-day U.S. holiday weekend and lingering worries over supply risks despite the receding likelihood of a U.S. military strike against Iran. O/R

U.S. President Donald Trump said he had been told that killings in Iran’s crackdown on protests were easing and that he believed there was no current plan for large-scale executions, adopting a wait‑and‑see posture after earlier threatening intervention.