(Reuters) – The ongoing attacks in Israel will not have a major short-term impact on oil stocks, Goldman Sachs estimates in a note.
The bank adds, however, that these attacks reduce the likelihood of a normalization of relations between Israel and Saudi Arabia, as well as the increase in Saudi production which was to accompany the normalization of these relations.
Hamas’ attack on Israel and the Jewish state’s response in the Gaza Strip have driven up oil prices as markets factor in fears of a wider conflict in the Middle East.
Oil was up more than $3 a barrel on Monday, and Brent was trading around $87 a barrel at 0850 GMT.
Goldman Sachs continues to forecast that Brent will reach $100 by June 2024, while noting that there has been no impact on current global oil production at this stage of the conflict.
“With oil prices declining over the past two weeks, and little indication that commercial oil stocks have been stressed over the past three months, this weekend’s developments reduce the likelihood of a recovery rapid increase in Saudi production.
The escalation of the conflict reduces the likelihood of a near-term normalization of Israeli-Saudi relations, adds Goldman Sachs, which still expects Saudi Arabia to reverse its million-barrel production cuts per day only gradually by the first quarter of 2025.
A more likely scenario, in which Saudi crude production remains stable at 9 million barrels per day in 2024, would raise the bank’s Brent price forecast for December 2024 to $104.
Goldman Sachs points out that the conflict also raises the threat of a resumption of regional tensions and that the risks to its Iranian production projections are now tilted to the downside.
Any drop of 100,000 barrels per day in Iranian production in 2024 compared to the baseline would increase the price of Brent at the end of 2024 by just over a dollar per barrel, the bank adds.
(Written by Swati Verma, French version Corentin Chappron, edited by Blandine Hénault)
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