Oil Price forecast by Rystad Energy - June 16

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Oil prices are likely to remain capped below $80 per barrel despite the escalating Israel-Iran conflict, research firm Rystad Energy said on Monday, as Iran and Israel continue to trade strikes with the escalation now in its fourth day.

“Based on our earlier disruption simulations, we see oil prices capped below $80 per barrel,” Mukesh Sahdev, Rystad Energy’s Global Head of Commodities Markets – Oil, said in a market update, carried by Africa Oil+Gas Report.

The conflict appears likely to be contained and the United States could potentially play a central role, according to Sahdev.

The worst fear in the market is a potential closure of the Strait of Hormuz, the world’s most critical crude flow lane where more than 20 million barrels of crude pass every day—equal to a fifth of global daily oil consumption.

While disruption to Strait of Hormuz flows could be devastating and would send oil prices spiking and add further tensions, it is an unlikely scenario for many observers and analysts, including those at Rystad Energy.

“A blockade remains the key risk that could push markets into uncharted territory,” Janiv Shah, Rystad Energy’s Vice President, Commodities Markets – Oil, said.

However, “Given its interest in keeping prices closer to $50, the US could play a stabilizing role,” Shah added.

“We maintain our view that this is likely to remain a short-lived conflict, as further escalation risks spiraling beyond the control of key stakeholders,” Shan said.

Despite Israel and Iran hitting each other’s energy sites over the weekend, the targets are not material to global oil production or crude flows.

Following the oil price jump on Friday after the start of the Israeli strikes on Iran, oil was muted in early trading on Monday, with both benchmarks falling by around 1% and trading in the low $70s per barrel as key oil flows from the Middle East remain unaffected.

By Charles Kennedy for Oilprice.com

MY TAKE is that the "Right Price" for WTI is now over $70/bbl and over $75/bbl in 2026 once the FEAR of the Trade War fades.

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The Organization of the Petroleum Exporting Countries (OPEC) produced less crude oil in May than its laid out plans.

According to the data published by OPEC, the cartel increased its production output by 154,000 barrels a day, despite announcing plans to improve it by 411,000 barrels during the month. < All OPEC+ did was raise quotas, they never said it would raise actual production or exports. A number of countries have been producing more than their quotas for years.

Meanwhile, a cool-down in crude oil prices dragged down ETFs on Monday.

The United States Oil Fund LP (USO) fell 1.75%, while the ProShares Ultra Bloomberg Crude Oil (UCO) was down 2.07% at the time of writing.

A Bloomberg report identified that the reason for the lower-than-planned output increase was two OPEC members, Iraq and the United Arab Emirates, and one OPEC+ member, Russia, compensating for overproduction during the previous months.

Kazakhstan, an OPEC+ member, continued to exceed its quota yet again. Despite cutting output by 21,000 barrels, the country’s production in May stood at 1.8 million barrels, exceeding its May quota by more than 300,000 barrels.

OPEC Secretary General Haitham Al-Ghais said that the cartel does not need to take any immediate action as oil supplies have not been impacted yet due to the ongoing conflict between Israel and Iran.

Across the 22-nation group, May oil output stood at 41.23 million barrels per day, an increase of 180,000 barrels over the previous month.

OPEC expects the global oil demand and supply to be relatively stable, despite the Israel-Iran conflict. The wider OPEC+ group will hold a meeting in July to consider another round of production hikes in August.