Longer-term outlook for oil has brightened, says Rapidan's McNally

Summary

Bob McNally of Rapidan Energy Group discusses oil markets amid Iran unrest and broader geopolitical risk. He sees Iran as a likely flashpoint and assigns 70% odds to renewed Israeli strikes in the first half, but does not expect a major sustained oil-supply disruption. He also points to near-term oil oversupply, with prices trending down and the curve moving into contango. McNally expects OPEC+ to defend the downside by reversing production hikes if crude falls to the low-to-mid $50s or $40, which supports a brighter longer-term outlook.

• Iran is seen as a likely energy-market flashpoint this year.
• McNally assigns 70% odds to renewed Israeli strikes on Iran in H1.
• He does not expect a major sustained oil-supply disruption from geopolitics.
• Oil prices and curve shape point to near-term oversupply.
• IEA and Rapidan see large Q1 oil surpluses.
• OPEC+ is expected to defend prices if crude falls to the $50s or $40s.
• That support could brighten the longer-term oil outlook.