Oil price – what the projections are for the next few months

Armed conflict in the Middle East, where a significant part of the world's oil is produced, highlights the uncertainty around political and military dynamics within this region, according to Absa AgriBusiness.

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The war between Israel and Iran escalated rapidly in mid-June, ending with a ceasefire announced by the US 12 days later.

After the Brent crude oil price breached US$77/barrel on 19 June, the deescalation of military action caused the price to fall to US$71,48 on 23 June (see graph below).

Oil prices are a key driver of agricultural input costs. As a result of this, it is important to explore future price paths and to consider what it could mean for farmers.

SCENARIO 1:

FIGHTING RESUMES

Renewed military conflict between Israel and Iran could affect Iran's ability to produce and export oil. The country exports just short of two million barrels of oil per day, which constitutes around 2% of the world's demand.