Goldman Sachs Maintains $80-90 Brent Crude Forecast Amid Mideast Uncertainty

Goldman Sachs is maintaining its forecast of Brent crude trading within an $80-90 per barrel range until there is either confirmation of a new U.S.-Iran deal or significant escalation in attacks and targets in the region.

The bank estimates the fair value of Brent spot prices at around $80 a barrel, based on its OECD commercial stocks counter, current demand estimates, and the historical relationship between inventories and spot prices. This suggests that the market is pricing in 'only a moderate risk premium despite still very high uncertainty about Mideast supply,' according to strategists led by Yulia Zhestkova Grigsby.

In contrast, the physical oil market has been tightening, with Goldman's global visible stocks counter showing a drawdown of 6.3 million barrels per day over the past two weeks. Reduced flows from the Persian Gulf and Red Sea, lower Russian oil exports, and stronger Asian imports have all contributed to this trend.

Saudi Arabia has partially offset the disruption by redirecting flows through the SUMED pipeline, which connects the Gulf of Suez to the Mediterranean; however, Russian crude and condensate exports declined by 1.3 million barrels per day over the same period.