Goldman Expects Strait Of Hormuz Flows To Restart After 5 Days; Fully Normalize in 4 Weeks

With oil prices posting daily gains - Brent rose as high as $84 this morning, before paring gains and dropping back to $81 - even after Trump's decree to provide insurance and escorts, if needed, to ship transiting the Strait of Hormuz, we are starting to see bank after bank - which until recently were very bearish on oil due to "structural oversupply" - raise their price targets.  The latest among them is Goldman Sachs, which in a note from chief oil strategist Daan Struyven writes that the "the market processes mixed signals with some relief from a potential gradual recovery in Strait of Hormuz flows but also some renewed concerns as evidence of production cuts grows" and raised its Q2 average oil price forecast for Brent by $10 to $76/bbl (vs. $66 prior) and by $9 for WTI to $71 (vs. $62) for two reasons.

• First, the bank assume that 5 additional days of very low (15% of normal) Strait of Hormuz (SoH) exports followed by a gradual recovery over 28 days will lead in March to large OECD inventories declines and 200mb of estimated Middle Eastern crude production losses as storage approaches congestion.
• Second, lingering geopolitical uncertainty will continue to support the risk premium