Oil – Strait of Hormuz
Goldman Sachs said that oil prices are likely to exceed $100 a barrel next week if there are no signs of resolving the severe crisis disrupting the flow of oil through the Strait of Hormuz, warning that the upside risks to its fundamental forecast are increasing more quickly.
The bank said it intends to reconsider its oil price forecasts soon if evidence does not emerge to support its assumption that the flow of oil through the Strait of Hormuz will gradually return to normal over the next few days.
His current forecast for Brent crude prices is $80 per barrel in March and $70 per barrel in the second quarter.
“We also now believe that oil prices, especially refined products, are likely to exceed the peaks of 2008 and 2022, if the decline in oil flows through the Strait of Hormuz continues throughout March,” the bank added.
Crude oil is expected to record its strongest weekly gains since the extreme volatility witnessed by the Covid-19 pandemic in the spring of 2020, after conflict in the Middle East halted shipping and energy exports through the vital Strait of Hormuz.
Goldman Sachs currently estimates that average daily flows through the Strait of Hormuz have declined by 90 percent.
A spokesman for the Iranian Revolutionary Guard challenged US President Donald Trump to deploy American warships to escort oil tankers through the Strait of Hormuz.
Trump called on Iran to “unconditionally surrender”, in a dramatic escalation of his demands after a week of war that he launched alongside Israel, which may make negotiating a quick end to the conflict more difficult.
Earlier today, Barclays Bank said that Brent crude could reach $120 a barrel if the conflict in the Middle East continues for several more weeks.
