Goldman Sees Brent at $80-$90 Until US-Iran Deal or Major Escalation

Goldman Sachs anticipates Brent crude oil will trade within a $80-$90 per barrel range, contingent on the confirmation of a new US-Iran nuclear deal or a substantial escalation of their conflict. The bank's analysis suggests that current market prices, with spot Brent valued around $80 a barrel, do not fully reflect the considerable risks to Middle East oil supplies.

Brent crude hovered near $85 a barrel amid conflicting signals regarding the status of US-Iran talks aimed at ending their five-month conflict. While Brent prices dipped into the low-to-mid $80s following the US decision to delay strikes on Iran and reports of progress in talks over maritime traffic in the Strait of Hormuz, Goldman Sachs points to ongoing tightening in physical oil markets.

The bank estimates that global visible oil inventories have decreased by 6.3 million barrels per day over the past two weeks. This reduction is attributed to diminished flows from the Gulf and Red Seas, decreased Russian exports, and robust Asian imports. Specifically, Gulf oil exports have fallen to approximately 36% of pre-conflict levels on a seven-day moving average, a sharp decline from nearly 80% in early July. Furthermore, loaded tanker capacity in the Red Sea has dropped by 22% since the Iran-aligned Houthis declared a blockade.

Goldman Sachs also highlighted a recent downturn in Russian crude supplies. Exports of Russian crude and condensate have fallen by 1.3 million barrels per day in the last two weeks. Recurring disruptions at the CPC terminal in the Black Sea have also resulted in shipments falling well below normal levels, further contributing to the supply constraints.