Could the markets be underpricing oil, and is that a problem? | The Business | ABC NEWS

The oil market looks to be pricing in an end to the Iran war, but Commonwealth Bank's sustainable and energy economist thinks there is trouble ahead. Brent crude dropped 1.6 per cent late on Monday, reversing an initial 2 per cent jump in early Asian trade, as the US and Iran ended high-level peace talks, paving the way for lower-level negotiations this week. Both parties have agreed to create a "de-confliction cell" to address the ongoing fighting in Lebanon -- which is clearly a sticking point for negotiations. John Oh thinks the market is underpricing oil. He thinks there is a lot of optimism in the market driving the price lower including the peace deal and large traffic flows through the Strait of Hormuz. He says CBA is predicting Brent crude to fall to $US80 a barrel by the end of the year. #ABCBusiness Subscribe: http://ab.co/1svxLVE Note: In most cases, our captions are auto-generated. #ABCNEWS #ABCNEWSAustralia