Oil Over $100 Seen on Iran After Worst Quarter Since 2008
Brent crude is set to recover from its worst quarter since 2008 as a European Union ban on Iranian oil takes effect, central banks act to protect growth and on speculation OPEC will curb some of its excess supply.
Brent, the second-worst performer between April and June in the Standard & Poor’s GSCI commodity index, is forecast to rebound to an average $114.50 a barrel in the third quarter, according to the median estimate of 32 analysts tracked by Bloomberg. BNP Paribas SA, Deutsche Bank AG and Barclays Plc predict $110, $115 and $121, respectively. Prices dipped as low as $88.49 last week in London and rose as high as $93.85 today.
.“We do look for a rebound and feel that the oil price has gone beyond economic fundamentals,” Michael Lewis, Deutsche Bank’s head of commodities research in London, said by phone on June 26. “We are in quite an extreme level of investor pessimism, which would only seem to us justified if the U.S. was going back into a recession.”
The prospect of a rebound in prices driven by sanctions on Iran illustrates the readiness of the U.S., Europe and their allies to suffer higher fuel costs in order to curb the Islamic republic’s nuclear program. The EU, Iran’s biggest buyer after China, is due to stop importing the nation’s oil July 1. While reflecting an improvement in demand as major economies tackle the fallout from Europe’s sovereign debt crisis, rising prices may also pose headwinds to a recovery.