Goldman Sachs said on Tuesday it expects Brent crude to trade in an $80-$90 per barrel range until there is either confirmation of a new U.S.-Iran nuclear deal or a significant escalation of their conflict.
The bank estimates spot Brent’s fair value at about $80 a barrel, suggesting markets are pricing in only a modest risk premium despite ongoing uncertainty over Middle East oil supplies.
Brent traded near $85 a barrel on Tuesday as conflicting signals from the U.S. and Iran over the status of talks to end their five-month-old war sowed uncertainty.
Although Brent retreated to the low-to-mid $80s after the U.S. delayed planned strikes on Iran and reports suggested progress in talks over managing traffic through the Strait of Hormuz, Goldman said physical oil markets continue to tighten.
It estimated global visible oil inventories fell by 6.3 million barrels per day over the past two weeks, driven by reduced flows from the Gulf and Red Sea, lower Russian exports and stronger Asian imports.
It estimates Gulf oil exports have fallen to about 36% of pre-war levels on a seven-day moving average basis, from nearly 80% in early July.
Goldman also said loaded tanker capacity in the Red Sea has dropped 22% since the Iran-aligned Houthis announced a blockade.
The bank estimates Saudi oil exports are down 2.4 million barrels per day from a year earlier, although shipments have increasingly been rerouted through Egypt’s SUMED pipeline, partly offsetting disruptions to Red Sea shipping routes.
Goldman also highlighted a recent drop in Russian crude supplies. Exports of Russian crude and condensate fell by 1.3 million bpd over the past two weeks, while recurring disruptions to loadings at the CPC terminal in the Black Sea have left shipments well below normal levels.
(Reporting by Pablo Sinha in Bengaluru. Editing by Mark Potter)