LIVE MARKETS-UBS warns of further upside risks for energy
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UBS WARNS OF FURTHER UPSIDE RISKS FOR ENERGY
Energy prices are surging again on Thursday after U.S. President Trump signalled another two to three weeks of military operations in Iran, and offered no concrete timeline for ending the war.
Markets had been prepping for Trump to signal operations were winding down but, for now, the conflict looks set to continue, and UBS believes that oil prices could go higher.
"We continue to see near-term risk to the upside for oil and gas prices, as long as we do not have visibility on a meaningful resumption of flows via Hormuz," writes UBS analyst Henri Patricot.
Iran has effectively shut the Strait of Hormuz, a waterway that typically carried about 20% of global oil and liquefied natural gas before the war broke out.
UBS estimates the supply disruption pushed global oil inventories to their five-year average by the end of last month. If disruptions persist, they expect inventories to be below the bottom end of the range by the end of April.
"As we get closer to these levels, we expect oil prices to rise further this month, potentially going to >$150/bbl if there is no improvement in sight," says Patricot. Brent crude futures LCOc1 were last trading at about $109 per barrel, up almost 8% on the day.
(Samuel Indyk)
EARLIER ON LIVE MARKETS:
SOFTWARE EARNINGS: NO 'TURNING POINT' IN SIGHT CLICK HERE
DE-DE-ESCALATION CLICK HERE
EUROPE BEFORE THE BELL: HEADING FOR AN UGLY OPEN CLICK HERE
PRIME-TIME DISAPPOINTMENT CLICK HERE
