Goldman sees Brent at $80-$90 until US-Iran deal or major escalation

Goldman Sachs stated on Tuesday that it expects Brent crude oil to trade between $80-$90 a barrel until either a new nuclear agreement is confirmed or there has been a significant escalation in the conflict between Iran and the United States.

The bank estimates place Brent's fair price at around $80 per barrel. This suggests that markets have only priced in a modest premium for risk despite the ongoing uncertainty about Middle East oil supply.

Brent crude oil traded at around $85 per barrel on Tuesday, as contradictory signals from the U.S. The conflicting signals from the?U.S.

Goldman says that despite the fact that Brent oil prices have fallen to low to mid $80s, after the U.S. postponed planned strikes against?Iran, and there are reports of progress in the talks about managing traffic through Strait of Hormuz (the Strait of Hormuz), the physical oil markets remain tight.

The global oil 'inventory' fell by an estimated 6.3 million barrels per day in the last two weeks. This was due to reduced flows out of the Gulf and Red Sea as well as lower Russian exports.

On a 7-day moving-average-basis, it estimates Gulf oil exports are down to 36% from pre-war levels. This is compared to nearly 80% at the beginning of July.

Goldman said that the Red Sea tanker capacity has also dropped by 22% since Iran-aligned Houthis declared a blockade.

Bank estimates Saudi oil exports have fallen by 2.4 million barrels daily from the previous year, despite shipments being increasingly rerouted via?Egypt’s SUMED pipe, partially offsetting disruptions in Red Sea shipping routes.

Goldman highlighted the recent decline in Russian crude supply. Over the last two weeks, exports of Russian crude oil and?condensate have fallen by 1.3m bpd. Meanwhile, recurring delays at the CPC terminal on the Black Sea has left shipments far below normal levels. Reporting by Pablo Sinha from Bengaluru. Mark Potter (Editing)

(source: Reuters)