Goldman Sees Oil Prices Stuck Between $80-$90 Amid Mideast Uncertainty

Goldman Sachs predicts oil prices will stay in the $80-90 per barrel range until there's either confirmation of a new U.S.-Iran deal or a significant escalation in attacks and targets in the region. The bank's strategists, led by Yulia Zhestkova Grigsby, estimated the fair value of Brent spot prices at around $80 a barrel, based on OECD commercial stocks, current demand estimates, and the historical relationship between inventories and spot prices.

The market is pricing in only a moderate risk premium despite high uncertainty about Mideast supply, Goldman said. However, the physical oil market has been tightening due to reduced flows from the Persian Gulf and Red Sea, lower Russian oil exports, and stronger Asian imports, particularly into China.

Persian Gulf oil flows fell to 36% of pre-war levels, or roughly 9 million barrels per day on a seven-day moving average, down sharply from nearly 80% of pre-war levels in the first half of July. Saudi Arabia has partially offset the disruption by redirecting flows through the SUMED pipeline.