Oil Price Today (August 3): Crude oil crashes 5% below $84 as Trump delays attack on Iran. What are experts saying?

Crude oil price on August 3

Brent crude futures fell $4.37, or 5%, to $83.56 a barrel, while U.S. West Texas Intermediate crude declined $4.63, or 5.5%, to $80 a barrel.The sharp decline followed a strong rally last month, when both contracts had gained more than 20% after fighting between the U.S. and Iran resumed. Concerns over attacks on several tankers near Oman also heightened security risks, discouraging shippers from entering the Gulf to load crude.

Also read:Trump's closest Gulf allies are frustrated with his Iran war strategy: Report

On Sunday, OPEC+ approved an increase of around 188,000 barrels per day in its oil production quota for September, marking the completion of the rollback of one tranche of its voluntary output cuts.

Analysts hopeful?

The trajectory of oil prices will largely depend on the duration of the supply disruption. JPMorgan estimates that every additional month of disruption could lift Brent prices by about $7 to $8 a barrel. If the disruption extends for three months, the bank expects the monthly average Brent price to reach around $114 a barrel.Read more:Oil prices surge 20% in July as US-Iran war heightens Strait of Hormuz tensions

Based on that assumption, Goldman Sachs expects Brent to average $80 a barrel in the fourth quarter and $75 a barrel next year. Even so, the bank said the risks to its forecasts remain "tilted to the upside", citing the possibility that shipping disruptions could continue in both the Strait of Hormuz and the Red Sea.

"The direction of our outlook is unchanged; the path and the timeline have shifted. We still expect oil to cool as we move into 2027, for three reasons: supply outside the conflict zone is expanding, with OPEC+ raising production targets, the UAE at record output and non-OPEC barrels responding to price, said Anindya Bannerjee, Head of Commodity Research at Kotak Securities.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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