DUBAI: Goldman Sachs Group Inc flags the possibility of higher oil and gas prices after the United States struck Iran, even as the bank’s base-case outlook hinges on major disruptions to supplies from the region.
If oil flows through the Strait of Hormuz drop by half for a month, and remained 10% lower for another 11, Brent would spike briefly to as much as US$110 a barrel, analysts said in a note.
Should Iranian supply fall by 1.75 million barrels a day, Brent would peak at US$90. The oil market is trying to figure out the likely trajectory for energy prices as the crisis in the Middle East escalates.
Crude futures are presently near US$79 a barrel, having surged in early Asian trading after the United States hit three Iranian nuclear sites at the weekend. Brent then pared some of its gains, with a renewed focus that actual flows are so far unhindered.
“The economic incentives, including for the United States and China, to try to prevent a sustained and very large disruption of the Strait of Hormuz would be strong,” the analysts said.
The bank still assumes there’ll be no significant disruptions to flows, although “the downside risks to energy supply and the upside risk to our energy price forecasts have risen,” they said. — Bloomberg
