Just days after the fastest drop in the price of oil in over a year (when mere days earlier Brent almost touched $100), the oil market is facing yet another potential kneejerk shock, this time in the opposite reaction.
In response to the sudden war between Israel and Hamas which could escalate and potentially drag in states such as Iran, Goldman's commodity desk has laid out its thoughts on how the oil market may react. We excerpt the highlights below (full note available to pro subs).
As Goldman's chief commodity strategist Daan Struyven writes on Sunday afternoon, amid the elevated uncertainty and incomplete information at this early stage, there has been no impact to current global oil production, and furthermore any immediate large effect on the near-term supply-demand balance and near-term oil inventories - which tend to be the main fundamental driver of oil prices - is unlikely. Therefore, Goldman continues to forecast that the Brent oil price rises gradually from $85/bbl as of Friday to $100/bbl by June 2024. That said, the bank identifies two potential implications of Saturday’s shocking attacks that may weigh on global oil supply over time.