Huatai Securities: Conflict between Iran and Israel has escalated, oil prices entering a high volatility stage.

Huatai Securities research report stated that on June 13th, Israel launched airstrikes on dozens of nuclear facilities and military targets in Iran, escalating the geopolitical tensions in the Middle East. The potential risk of a decrease in oil supply in the region has emerged, combined with the fact that the actual supply increment of OPEC+ in April-May was lower than the target increase, and the traditional high-demand season in the northern hemisphere is approaching, causing oil prices to increase significantly. On June 13th, WTI and Brent crude oil futures prices closed at $72.98 and $74.23 per barrel, respectively, up 16.7% and 14.9% from the beginning of the month. Huatai Securities believes that Iran's oil production and exports may decline in the short term, leading to high volatility in oil prices. The Strait of Hormuz is crucial for the core interests of oil-producing countries like Saudi Arabia in the Middle East, and the risk of transportation disruption awaits further evaluation. Global oil demand continues to be impacted by electricity and gas shocks, with supply-side oil-producing countries weakening their cooperation and emerging supply forces rising. It is predicted that the central price of oil will continue to decline from 2025 to 2027, based on marginal costs and the new round of rebalancing focused on quality over quantity. The central price of oil is expected to remain above $60 per barrel.