Goldman Sachs said oil prices could rise by $20 a barrel if Israeli retaliation results in a hit to Iranian output.
U.S. crude futures rose about 5% on Thursday and were higher again on Friday morning on concerns that Israel could attack Iran’s oil industry in retaliation for Tehran’s missile attacks this week.
Daman Struyven, co-head of Goldman Sachs, estimates that “if Iran’s production continues to fall by 1 million barrels per day, peak oil prices will rise by about $20 per barrel next year,” the head of global commodities research told CNBC’s “Squawk Box Asia” on Friday.
Struvan said that’s assuming the oil cartel OPEC+ doesn’t respond by increasing production.
He added that the oil market could see a boost of just under $10 a barrel if major OPEC+ members such as Saudi Arabia and the United Arab Emirates offset some of the production losses.
Since the armed conflict between Israel and Hamas broke out on October 7 last year, the oil market has suffered limited disruption, with oil prices still under pressure due to increased U.S. production and weak Chinese demand.
However, market sentiment may shift this week.
U.S. crude prices rose for a third straight session after Iran launched a ballistic missile attack on Israel, raising tensions in the region. In recent days, industry observers have sounded the alarm, warning of real threats to supply.
Iran is a member of OPEC and an important player in the global oil market. It produces nearly four million barrels of oil per day, estimated 4% If Iran’s oil infrastructure becomes targeted by Israel as it considers countermeasures, the world’s oil supplies could be at risk.
Saul Kavonic, senior energy analyst at MST Marquee, raised the possibility that Iran’s Khag Island, which is responsible for 90% of the country’s crude oil exports, could be targeted.
He added: “The bigger concern is that this is the imminent start of a wider conflict that could affect transit through the Strait of Hormuz.”
Other analysts have also said supply disruptions in the Strait of Hormuz could cause concern if Israel cracks down on Iran’s oil industry.
Iran has previously threatened to disrupt the flow of oil through the Strait of Hormuz if its oil sector was affected.
The strait between Oman and Iran is an important passage About one-fifth of them According to the U.S. Energy Information Administration, global daily oil production has exceeded 10%. The strategically important waterway connects Middle Eastern crude producers to major global markets.
Asked by reporters on Thursday whether the United States would support an Israeli attack on Iranian oil facilities, U.S. President Joe Biden said: “We’re talking about it. Regardless, I think it will be a little bit.”
Oil analysts saw the comments as a catalyst for higher oil prices.
CNBC has reached out to the White House for comment.
“In the event of an all-out war, Brent crude prices could soar above $100/b, with any potential strait closures threatening $150/b,” Fitch Solutions’ BMI wrote in a report released on Wednesday. barrel or higher.
Analysts at BMI said that while the likelihood of a full-scale war remained “relatively low”, the risk of mistakes on both sides was now rising.
While some industry analysts believe OPEC+ has enough spare capacity to make up for disruptions to Iran’s exports if Israel targets its oil infrastructure, the world’s spare oil capacity remains largely concentrated in the Middle East, especially in the Gulf states, which could be at risk if Greater conflict worsens.
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