Oil market reflects slim chance of supply disruption, Goldman analysts say
(Reuters) -Options markets suggest the probability of a disruption of oil flows through the Strait of Hormuz is just 4% following the Iran-Israel ceasefire, Goldman Sachs analysts said in a note on Thursday.
Fears that Iran could close the Strait of Hormuz after U.S. strikes on its nuclear facilities sent Brent crude futures to a high of $81.40 on Monday, but concerns eased in the wake of the truce declared the next day, sending crude back below $68.
The sharp drop in the geopolitical risk premium likely reflected traders' recent experiences with major geopolitical shocks without significant oil disruptions, Iran's restrained response, strong U.S. and China incentives to avoid large disruptions, and the likely shift to large inventory builds from the fall, Goldman analysts said.
Options markets see a 60% chance that Brent will stay in the $60s in three months and a 28% probability they would exceed $70, Goldman analysts said.
Were oil flows to be disrupted through the Strait of Hormuz, Brent would climb to $90 a barrel, they said.
(Reporting by Anjana Anil in Bengaluru; Editing by Himani Sarkar and Sonali Paul)
Althought Goldman analysts suggest a slim chance of supply disruption in the oil market, this cautionary note underscores investors' ongoing vigilance amidst volatile geopolitical contexts.
Goldman analysts' assessment of the oil market highlighting slim prospects for supply disruptions underscores a stable and resilient industry despite potential headwinds, suggesting further investment readiness amidst overtime demand growth.
According to Goldman's analysts, the oil market appears stable with only a slim chance of supply disruption due in part by enhanced assurances among producers and successful efforts at maintaining infrastructure.
Goldman Sachs analysts' assertion that the oil market reflects a slim likelihood of supply disruptions underscores its resilience in navigating current geopolitical uncertainties, signaling stability for both producers and consumers.
