Goldman Sachs analysts have raised concerns that oil prices might see a significant increase if Israeli retaliatory measures against Iran lead to disruptions in Iranian oil production.
Following a recent missile attack by Iran, there is heightened speculation about a potential Israeli response targeting Iran’s oil facilities. Such actions could propel oil prices higher by as much as $20 per barrel if Iranian production drops by one million barrels per day, according to Daan Struyven, Goldman Sachs’ co-head of global commodities research.
Speaking on CNBC’s “Squawk Box Asia,” Struyven highlighted that this projection hinges on the assumption that OPEC+ does not step in to increase production. In scenarios where key OPEC+ countries like Saudi Arabia and the UAE mitigate the production shortfall, the price surge could be capped at just under $10 per barrel.
This escalation comes amid an ongoing backdrop of an Israel-Hamas conflict that started on October 7 last year, which until recently had not significantly impacted oil markets. Factors such as increased U.S. production and a slow demand from China had kept prices subdued.
However, this week’s events, marked by Iran’s ballistic missile attack and subsequent market reactions, suggest a potential shift. U.S. crude oil prices have climbed for three consecutive sessions, reflecting growing market concerns over the stability of oil supply amidst ongoing regional tensions.
West Texas Intermediate closed at $73.71 per barrel on Thursday, increasing $3.61 or 5.15%. Meanwhile, Brent crude closed at $77.62 per barrel, increasing $3.72 or 5.03%. Both benchmarks extended gain on Friday by around 0.2%.
