Goldman Sachs forecasts $120 per barrel of oil if ship attacks escalate
Goldman Sachs has warned of escalating risks to shipping disruptions and attacks on vessels in the Strait of Hormuz amid the ongoing conflict between the United States and Iran, noting that oil prices could rise to $120 per barrel if attacks on shipping in the Middle East intensify. The bank advised betting on natural gas and diesel to capitalize on potential gains.
Dan Strain, co-head of global commodities research at the firm, told Bloomberg: “Developments over the past few days indicate that the risk of widening and intensifying shipping disruptions is a significant factor that should be taken into account.” Bloomberg quoted Strain as saying that oil could fall to $80 per barrel if regional exports return to normal levels.
Oil prices continued to rise amid growing fears of a prolonged disruption to Middle East supplies due to reciprocal attacks by the United States and Iran on ships in the Strait of Hormuz and other areas.
According to Tankerdata, crude oil exports from the Middle East fell by 39% in August compared to the baseline recorded in January and February, which stood at 18.5 million barrels per day. However, the lowest level was recorded in May, when the decline reached 67%. The current decline stands at only 7.2 million barrels per day, down from a previous 12.4 million barrels per day. The platform, which specializes in tracking tanker movements, clarified that these figures include Saudi Arabia, Iraq, Iran, Kuwait, Oman, the United Arab Emirates, and Qatar. It further noted that “exports from most of these countries are likely to recover in the coming months, while Iran’s exports, which had a baseline of 1.68 million barrels per day, are likely to remain at zero in the near future, pending a deal.”
Meanwhile, U.S. Energy Secretary Chris Wright stated that Washington is focusing on increasing oil supply rather than restricting exports to lower prices. Wright added on CBS’s “Face the Nation”: “We are considering all options regarding how to move prices in a way that is suitable for American consumers, but we are currently focusing on maximizing production and increasing capacity.” He added, “The way to solve supply shortages is to increase supply.”
Regarding tanker movements, Tankerdata revealed a sharp decline in crude oil supplies through the Strait of Hormuz due to the war’s repercussions, with levels dropping from 16.63 million barrels per day pre-conflict to 4.9 million barrels per day. It noted that during 186 days of war, the total volume passing through the strait amounted to 779 million barrels, at an average daily rate of 4.19 million barrels.
As winter approaches, the fuel issue returns to the forefront of the economic agenda in the Arab region, as it is a key element linked to home heating costs, prices of basic goods, and freight and crop transportation costs to markets. According to the center’s report, despite a recovery in export activity to reach 10 million barrels during the implementation of the “memorandum of understanding,” the imposition of the second round of U.S. sanctions has stabilized oil flows at the current level of 4.9 million barrels per day.
In transit movements, Shipfinder reported that 14 ships passed through on September 5, 10 of which exited the Arabian Gulf and four entered. The traffic included the Panama-flagged oil and petroleum products tanker “Al Gaya” and the Cameroon-flagged liquefied natural gas (LNG) tanker “Gwen,” in addition to cargo and container ships and other vessels. It added that Automatic Identification System (AIS) data shows volatile but generally weak commercial activity.
While the total number of ships within the Arabian Gulf recovered to 4,228 on September 4, after dropping to 3,598 on September 3 and recording other low levels earlier in the month, the actual daily transit volume through the strait remains notably constrained.
On the price front, oil prices continued to rise amid growing fears of a prolonged disruption to Middle East supplies due to reciprocal attacks by the United States and Iran on ships in the Strait of Hormuz and other areas. Brent crude rose 7.8% last week, while U.S. West Texas Intermediate (WTI) crude gained about 10%, following the resumption of attacks by the United States and Iran, which led to a decline in oil flows through the Strait of Hormuz, which previously handled one-fifth of global oil supplies before the war.
Data released by Kpler showed that the daily average of commodity-carrying ships passing through the Strait of Hormuz was 10 ships over the past ten days, the lowest level since May.
