Goldman Sachs expects Brent crude to trade in an $80-$90 per barrel range until there is greater clarity on either a new U.S.-Iran nuclear agreement or a significant escalation in the conflict between the two countries, according to a Reuters report on Tuesday.
The investment bank estimated the fair value of spot Brent crude at around $80 per barrel, indicating that oil markets are currently pricing in only a modest geopolitical risk premium despite persistent uncertainty over Middle East oil supplies.
Brent crude traded near $85 per barrel on Tuesday as mixed signals from the United States and Iran regarding negotiations to end their five-month-old conflict continued to cloud the market outlook.
According to Reuters, Goldman Sachs said that although Brent prices eased into the low-to-mid $80 range after the United States delayed planned strikes on Iran and reports pointed to progress in talks over managing shipping through the Strait of Hormuz, physical oil market conditions have continued to tighten.
The bank estimated that global visible oil inventories declined by 6.3 million barrels per day over the past two weeks. The drop was driven by lower oil flows from the Gulf and Red Sea, reduced Russian exports and stronger crude imports across Asia.
Goldman Sachs also estimated that Gulf oil exports have fallen to around 36% of their pre-war levels on a seven-day moving average basis, compared with nearly 80% in early July, according to the Reuters report.
The bank further noted that loaded tanker capacity in the Red Sea has declined by 22% since Iran-aligned Houthi forces announced a blockade, adding to concerns over regional supply disruptions.
Saudi Arabia's oil exports are estimated to be down by about 2.4 million barrels per day compared with a year ago. However, Reuters reported that an increasing share of shipments has been rerouted through Egypt's SUMED pipeline, helping to partially offset disruptions to Red Sea shipping routes.
Goldman Sachs also pointed to a recent decline in Russian crude supplies. According to Reuters, exports of Russian crude and condensate dropped by 1.3 million barrels per day over the past two weeks, while recurring disruptions at the CPC terminal in the Black Sea have kept shipments well below normal levels.
