TD Asset Management commodities analysts are not seeing a wider regional conflict in the Middle East as a base case:

  • You do have the potential for this situation to escalate if Iran gets involved. Iran is producing and exporting more oil than they have in the last five years, north of 3 million barrels a day. So there is some risk there
  • Hopefully, that is a sort of tail event, a worst-case scenario. But I think given the tightness in inventory, given kind of how fragile the balance is right now, it likely makes sense to embed a bit of risk premium around that

Oil update with the week's oil trade just kicking off:

oil tail risk iran israel gaza 16 October 2023