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Barclays predicts Brent could hit $80 per barrel due to tensions between the US and Iran

Barclays stated that Brent crude oil could reach around $80 per barrel in the event a material supply disruption occurs, given that tensions between Iran and the U.S. remain high.

The bank stated that "while it is possible that an 'escalation' does not result in a disruption in supply and the risk premium of $3-5/b in oil prices quickly fades, a 1mb/d outage in supply would question the widely anticipated supply glut, and push Brent to $80/b in our opinion."

Prices of oil rose by?about 2 percent on Friday as traders prepared for supply disruptions due to the ongoing nuclear talks between Iran and the U.S. Brent settled at $72.48 per barrel. Donald Trump, the U.S. president, expressed his disappointment on Friday over the U.S. nuclear negotiations with Iran. He warned that "sometimes force is necessary" amid the massive military presence that could lead to strikes against the Islamic Republic.

Barclays stated in a report that "the pushback against our view that geopolitical tensions continue to pose an asymmetrical upside risk for oil price is primarily based on recent history which argues in favor fading the risk premia around 'these events.

Barclays also said that oil prices may fall by up to $5 per barrel if there is no disruption in the supply of material and Iran does not respond to the U.S. strikes with the same fervor.

The report also warned that the market was structurally tightening due to low and decreasing spare capacity, tight inventory and strong demand.

(source: Reuters)