Barclays: Oil Prices Could Surge to $80 Amidst Supply Disruption

Oil prices could spike to $80 a barrel if a significant supply disruption occurs, Barclays bank has warned, citing heightened tensions between the United States and Iran.

Brent crude settled at $72.48 a barrel after trading ended Friday. Traders are closely monitoring potential supply disruptions following inconclusive nuclear talks between the U.S. and Iran.

Barclays noted that while it's entirely possible that an escalation may not lead to supply outages, and the $3-5 per barrel risk premium in oil prices could quickly dissipate, a disruption of one million barrels per day would increase uncertainty about the widely anticipated surplus and push Brent to $80 a barrel.

The bank cautioned that the market is experiencing a structural tightening, with declining spare capacity, shrinking inventories, and robust demand.

Conversely, Barclays indicated that if no major supply disruption materializes and Iran's reactions to any U.S. strikes remain muted, oil prices could decline by three to five dollars per barrel, all other factors being equal.

Barclays stated in a note that its rejection of the view that geopolitical tensions continue to pose asymmetric risks to oil prices is primarily based on recent history, which supports the fading of the risk premium surrounding these events.

The American president had previously expressed his disappointment regarding the American negotiations with Iran about its nuclear program and warned that "sometimes you have to use force."