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Royal Bank of Canada (RBC) analysts have warned that escalating tensions between the US and Iran could prolong into spring 2024, creating significant supply risks for global oil markets. The bank estimates that a prolonged conflict could push Brent crude prices above $90 per barrel, surpassing the 2022 peak of $86. The analysis highlights potential disruptions in the Strait of Hormuz, a critical oil transit chokepoint, and the likelihood of increased military interventions in the region. RBC also notes that OPEC+ production cuts and geopolitical uncertainty could amplify price volatility. For traders and investors, this scenario presents both risks and opportunities. Energy sector stocks, particularly in oil producers and exploration companies, could benefit from higher crude prices. However, prolonged instability might trigger broader market jitters, affecting risk assets like equities and commodities. Central banks may face renewed inflationary pressures, complicating monetary policy decisions. Traders should monitor real-time geopolitical developments, OPEC+ policy shifts, and US-Iran diplomatic signals. The implications for global markets are profound, with emerging economies—especially oil-importing nations—facing higher energy costs. For Gulf Cooperation Council (GCC) countries, rising oil prices could boost sovereign wealth funds and government revenues. Investors should watch for RBC's quarterly commodity outlook updates and potential adjustments in OPEC+ production quotas. Key technical levels for Brent crude include $85 (support) and $95 (resistance) as the market tests RBC's projections.
