On 9/4, Goldman Sachs revised its Q2 Brent and WTI crude oil price forecasts downwards, citing a reduced risk premium in oil prices and increased fuel flow through the Strait of Hormuz. This adjustment followed a 15-day ceasefire agreement announced between the US and Iran earlier this week.
The investment bank now projects average Q2 Brent crude prices at 90 USD and WTI at 87 USD. These figures represent a decrease from earlier forecasts of 99 USD and 91 USD, respectively.
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Boats move around an oil tanker during a drill in the Strait of Hormuz, 17/2. Photo: AFP
Brent crude prices initially fell by 11% this week, driven by expectations of the Strait of Hormuz reopening following the US-Iran ceasefire announcement. However, prices rebounded on 10/4 amidst concerns that Middle Eastern oil producers might not fully restore output. Brent crude rose by 2% to 98 USD a barrel on 10/4, while WTI saw a sharper increase of 2,3% to 100 USD. Investors remain skeptical about the durability of the ceasefire and continued restrictions in the Strait of Hormuz.
AFP news agency reported on 9/4 that only 10 ships have transited the Strait of Hormuz since the ceasefire took effect in the Middle East, according to maritime tracking data.
Looking ahead, Goldman maintained its Q3 forecasts for Brent crude at around 82 USD and WTI at 77 USD a barrel. For Q4, these prices are expected to further decrease to 80 USD and 75 USD, respectively.
Despite the downward revisions, Goldman suggests upside risks persist due to the potential for prolonged disruption in the oil market. In a less favorable scenario, if the ceasefire fails and Middle Eastern oil production experiences a sustained loss of 2 million barrels per day, Brent prices could surge to 115 USD by the end of this year.
The conflict between the US, Israel, and Iran has spanned over one month, resulting in more than 3,600 fatalities. This prolonged conflict has also paralyzed the flow of oil, gas, and other goods through the Strait of Hormuz. Last month, crude oil prices briefly neared 120 USD a barrel, marking a 4-year high.
Ha Thu (via Reuters)
