Goldman Sachs does not see any immediate major effect on near-term oil market inventories from the attacks in Israel over the weekend, it said in a note.
It added, however, that the attacks reduce the likelihood of normalization of the country’s relations with Saudi Arabia, and the associated boost to Saudi production over time.
Hamas’ assault on Israel drove oil prices higher as markets priced in fears of a wider conflict in the Middle East, a day after Israel pounded the Palestinian enclave of Gaza in retaliation for one of the bloodiest attacks in its history.
Oil was up over $3 a barrel in Asian hours on Monday, with benchmark Brent crude trading around $87 a barrel at 0623 GMT.
In the note dated Sunday, Goldman said it continues to forecast that Brent will climb to $100 by June 2024, while noting that there has been no impact to current global oil production at this early stage.
The escalating conflict reduces the likelihood of a near-term normalization in Saudi-Israeli relations, Goldman said.
Morgan Stanley said that the near-term risk to oil supply is limited as neither Israel nor its direct neighbours are large oil producers.
“However, that could change in case the conflict were to extend to other countries in the region,” analysts at Morgan Stanley said in a note on Monday.
Barclays said the conflict will lower expectations of a potential normalization of Israel-Saudi relations, which could drive a less aggressive oil policy from the kingdom.
A more likely scenario, where Saudi crude production stays flat at 9 million barrels per day in 2024, would raise its December 2024 Brent price forecast to $104, Goldman said.
Goldman said the conflict also raises the threat of broader regional tensions re-escalating, and risks to its Iranian production projections are now tilted to the downside.
Any 100,000 barrels-per-day decline in Iran’s 2024 production relative to the baseline would raise the end-2024 Brent oil price by just over $1 per barrel, it added.
(Reporting by Swati Verma in Bengaluru, additional; reporting by Brijesh Patel; Editing by Varun H K and Deborah Kyvrikosaios)