Israel-Iran reconciliation may drive oil toward $60 range: Experts

ISTANBUL - Anadolu Agency

Oil prices slumped more than 12 percent last week, snapping a three-week rally, with analysts expecting prices to stabilize around the $60 range in the near term.

Brent had climbed to $77.81 on June 23 after U.S. strikes targeted Iranian nuclear facilities. However, prices tumbled 8.5 percent in a single session to $69.48 later that day, after Tehran's retaliatory strike on a US base in Qatar was deemed limited in scope.

Downward pressure intensified after June 24, when reports of a ceasefire between Iran and Israel bolstered expectations of uninterrupted flows through the Strait of Hormuz.

Despite recent volatility, analysts expect prices to stabilize around the $60 range in the coming period, as geopolitical risk premiums ease and fundamental supply-demand dynamics regain control.

The trajectory of oil prices will hinge on signals from the upcoming OPEC+ meeting, said Ajay Parmar, director of Oil Markets and Energy Transition at Independent Commodity Intelligence Services (ICIS).

Parmar expects prices to stabilize around current levels until there is clearer guidance from OPEC+ following their production meeting on July 6.

“If OPEC+ choose to raise supplies further, prices could fall back from current levels into the mid-$60s," he said.

Yesar Al-Maleki, a Gulf analyst at Middle East Economic Survey (MEES), noted that prices are being supported by the absence of direct attacks on vital oil infrastructure in the Israel-Iran conflict and by a persistent supply glut in the market.

"In the near term, strong summer demand, including for oil in Middle East power generation, will continue to support prices and help drawdowns in global inventories," Al-Maleki said.