Goldman estimates geopolitical risk premium of around $10 per barrel for Brent after prices rise

June 18 (Reuters) - Following the rise in Brent prices to $76-77 per barrel, Goldman Sachs estimates a geopolitical risk premium of around $10 per barrel, the bank said in a note on Wednesday.
While its base case is that Brent declines to around $60/bbl in Q4 assuming no supply disruptions, Goldman said the $10/bbl premium appears justified in light of its lower Iran supply scenario where Brent spikes just above $90, and tail scenarios where broad regional oil production or shipping is negatively affected.
The Iran-Israel conflict has raised fears of potential supply disruptions in the Middle East, a key oil-producing region, pushing crude prices higher as traders react to the growing geopolitical risk.
President Donald Trump kept the world guessing on Wednesday whether the U.S. will join Israel's bombardment of Iranian nuclear and missile sites, as residents of Iran's capital streamed out of the city on the sixth day of the air assault.
Iran is OPEC's third-largest producer, extracting about 3.3 million barrels per day (bpd) of crude oil.
Brent crude futures settled 25 cents higher at $76.70 a barrel on Wednesday, while U.S. West Texas Intermediate crude rose 30 cents at $75.14.
Separately, Barclays said on Wednesday that if Iranian exports are reduced by half, crude prices could rise to $85 per barrel and that prices could move past $100 in the "worst-case" scenario of a wider conflagration.
Goldman said that the 45% decline in oil flows through the Bab-El-Mandeb Strait -- which connects the Red Sea to the Indian Ocean -- in 2025 versus 2023 illustrates the vulnerability of shipping to attacks from Iran-controlled Houthis.

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Times

42 minutes ago

• Times

‘We had seconds to decide if India's missile was nuclear'

As President Trump deliberated over whether to enter Israel's war with Iran, there was another potential conflict taking his attention last week. His unexpected guest on Wednesday was Field Marshal Asim Munir, Pakistan's army chief, for a closed-door lunch in the cabinet room, the first time a US president had hosted a Pakistan military chief who was not also the head of state. With Trump was Marco Rubio, his secretary of state, and Steve Witkoff, the former property developer turned special representative for the Middle East. Munir was accompanied only by Lieutenant General Asim Malik, the national security adviser. There were no civilian officials, perhaps reflecting whom Trump sees as holding power in Pakistan. 'The reason I had him here was that I wanted to thank him for not going into the war [with India],' said Trump. 'And I want to thank PM [Narendra] Modi as well, who just left a few days ago.' Pakistan has said that although all-out war between the two nuclear powers was narrowly averted by US intervention last month after the deadliest fighting in decades, the conflict in a region that is home to 1.6 billion people is far from resolved. As a result Pakistan and India were now closer to nuclear war than at any previous point, Bilawal Bhutto Zardari, the former foreign minister, told The Sunday Times. • No ceasefire will let India and Pakistan escape their history On the final day of clashes, he said, India had deployed a dual-use cruise missile capable of holding a nuclear warhead and Pakistan had had to make an immediate decision about whether it was under nuclear attack. 'In that atmosphere you've got only a few seconds to decide looking at an image: is this missile going to be used within the nuclear connotation or not? And in those split seconds decisions are made.' 'The escalation ladder was rising so fast,' Bhutto Zardari said. The situation in the region remained 'incredibly perilous'. He said: 'We've achieved a ceasefire but we haven't achieved peace. And that's problematic because following this recent conflict we have lowered the threshold for full-blown military conflict to the lowest it has ever been, to what I believe are dangerously low levels.' Bhutto Zardari was speaking while visiting London as head of a nine-member delegation of MPs sent by Shehbaz Sharif, the prime minister, to 'pitch for peace' and call for international talks to resolve the problem of Kashmir over which the two nations have fought three wars. He said Pakistan had agreed to the ceasefire because it was promised such a summit, which has not materialised. India has sent a rival delegation of politicians and diplomats led by the Congress MP Shashi Tharoor to London, Washington and elsewhere to argue that Pakistan is a sponsor of cross-border terrorism and a threat to global stability. The fighting between the two broke out last month after an April terrorist attack in the Indian-controlled part of Kashmir, which India blamed on Pakistan. Twenty-six people were shot dead in a meadow in the tourist resort of Pahalgam. • How the Kashmir massacre unfolded Islamabad denied responsibility but India launched strikes deep in Pakistan against what it claimed were terrorist training camps. Pakistan claimed that it shot down six Indian fighter planes before a US-brokered ceasefire came into force on May 10. Bhutto Zardari, 36, is leader of the Pakistan People's Party (PPP), which is in coalition with the ruling party, and the son of the president. His mother, Benazir Bhutto, was Pakistan's first female prime minister –— an office she held twice, the first time in 1988 just two months after giving birth to him. He insists that Pakistan had nothing to do with the Pahalgam attack, which was initially claimed by a little-known organisation called the Resistance Front that India says is an offshoot of Lashkar-e-Taiba (L-e-T), a Pakistani terrorist group long linked to Pakistan's military intelligence. The Resistance Front later retracted the claim. MUZAMMIL AHMED/AFP/GETTY IMAGES 'To this day, they [the Indian government] haven't provided the Indian public, their allies, or us, or the media, with names of the individuals involved in this attack,' Zardari said. 'If they did indeed come from Pakistan, who are they? Where did they come from? What border crossing points did they use? Who facilitated them? One of the largest and supposedly most efficient intelligence agencies in the world should be able to share this information.' Groups that Delhi claims are proxies for Pakistan have a long history of attacks in India — most notably the Mumbai massacre in 2008 in which terrorists laid siege to five-star hotels, going door to door shooting guests, murdering 166 people. The only attacker captured alive said the terrorists were members of L-e-T. Bhutto Zardari admits Pakistan has 'a credibility problem', adding: 'I'm not denying Pakistan has a complicated past.' That past is personal for him. He was thrust into frontline politics in 2007, when he was 19 and his mother was assassinated by terrorists. His grandfather, who founded the PPP, was executed by the military. Both his uncles met mysterious ends. For years Pakistan's military differentiated between militant groups, using some for their own purposes while pursuing others. He argues things have changed. 'This credibility and perception problem is rooted in deep biases, tainted by Islamophobia, and obfuscates from our actual effort to combat terrorism. 'I grew up during 9/11. My mother championed the fight against terrorism — she warned the world then. She gave her life doing that. Ever since she was assassinated, I at every point have opposed appeasement with any groups. We took the fight to these guys and my generation living in Pakistan now has nothing to do with it. 'I don't believe we should punish the children of Pakistan today for whatever happened in the past, particularly when we've fought against these groups and continue to as we've proven before international forums and under extreme scrutiny. We can't be condemned for past mistakes.' Bhutto Zardari accused the West of worsening Pakistan's security situation by abandoning Afghanistan and 'leaving a vacuum' there. Pakistan's military intelligence historically had close links to the Taliban but since the group took power in 2021 it has turned against its former backers. 'The rest of the world may have moved on from Afghanistan and exited Kabul, but we're fighting terrorism from there,' Bhutto Zardari said. 'The single largest number of terrorist attacks anywhere in the world is Pakistan.' At a meeting in London with Hamish Falconer, the Middle East minister, the Speaker and MPs, Bhutto Zardari raised the subject of an international conference on Kashmir. Pakistan sees the UK as having a particular responsibility, given that the conflict dates back to the British partition of India in 1947. Bhutto Zardari said: 'At a time where the Pakistani army believes that we had a military upper hand in the conflict, we agreed to a ceasefire because we believed there was a commitment from the United States that we'd go on to have a dialogue in a neutral location on all friction points. 'Now that isn't happening. We don't want the international community to get a false sense of ease as a result of the ceasefire. There's still a very real threat.'

Daily Mail​

an hour ago

• Daily Mail​

'Defiant' Israelis show little sign of backing down against Iran - but as the country continues to pay the price for its resilience, its citizens ask 'We're doing the world's dirty work, so why can't you British give us some moral support?'

The building has not so much blown up as imploded. Thickets of metal protrude from what was once the roof of this apartment block. It's as if a vengeful god has reached down from the heavens and yanked out its steel entrails. Next to it a skyscraper stands scorched, its side mottled with soot. The asphalt on the street below is torn, gaping open like a wound. Nearby, a carpet of shattered glass glints in the morning light. I'm in Ramat Gan in central Tel Aviv, where an Iranian missile attack has just struck several residential buildings. Emergency services have cordoned off the impact site. Police warn curious onlookers to watch their step, as throngs of gathered Press push against the makeshift barriers. One cheeky TV crew tries to scoot around them and is gently pushed back. Just hours earlier, I was awoken in my hotel room by an air-raid siren sounding across the city. An automated Hebrew voice then wafted into my room: get to an air-raid shelter – fast. A couple of soft thuds later, I understood that the city had just been hit. Israel may indeed have mastery of Iran's skies. It may be deploying its air defences highly effectively. But Iranian missiles are nonetheless getting through, and they are striking the heart of Israel's premier city. One thing is clear to me: this war is far from over. Israelis understand this. And, for the moment, they are united behind their government. Prime Minister Benjamin Netanyahu remains controversial (and loathed by many), but for now the consensus is that resolving the country's domestic politics can wait. It's time to deal with Iran – once and for all. The Israelis have had enough. And I don't blame them. I have studied the drama of the Islamic Republic of Iran's nuclear programme, and by extension the Iran-Israel conflict, for almost 20 years. Iran's war on Israel has been relentless. The mullahs declared a proxy war against the state of Israel in 1991. Ironically, this came after Israel had quietly sold them weapons during the eight-year Iran-Iraq war. Jerusalem was desperate to rekindle relations with the state it had been allies with under the Shah, Mohammad Reza Pahlavi, before he was ousted in the Islamic Revolution of 1979. It got a de facto declaration of war in response. Since then, the Iranians have expanded their malignant influence into Syria, Lebanon and Gaza to create what they call a 'ring of fire' around Israel – to scorch and burn the Jewish state at every opportunity. It's been effective. Even before the horrors of October 7, Iranian-backed proxies had killed and wounded thousands of Israelis. Shortly after I left the crash site, I spoke to Dr Meir Javedanfar, who teaches Iranian politics at Reichman University, on the Mail's weekly global news podcast, Apocalypse Now. Like so many Israelis, he looked tired, the result of sleep deprivation following repeated night-time missile attacks. Javedanfar was born in Tehran, and he explained proudly to me: 'Bar Mitzvah'd in Tehran, too!' Like so many others, including myself, he once thought that some type of reform could come to the Islamic Republic. But, like me, he saw that everyone who ever tried to bring reform was bypassed, imprisoned, tortured or killed. The Iranians have not let up against Israel, even for a moment. In a statement two days after October 7, Ayatollah Khamenei said that, while Iran was not involved in the Hamas massacre, the 'hands and forehead of its planners must be kissed'. Like so many Israelis, Javedanfar has had enough. 'From now on, Israel refuses to live with a regime that sponsors terror organisations who kill our civilians,' he told me. 'The Iranian regime wants Israel dead. It wants Israeli citizens dead. It denies the Holocaust. It is so depraved that it has Holocaust cartoon competitions. 'No Israeli government is willing to live with this any more. And so, on June 13 we acted – with amazing success, which was no surprise. Special operations are to Israel what watches are to Switzerland. Our expertise.' Make no mistake, the war is tough on the people here. As I walk through the streets, the normally bustling city is quiet, bereft of traffic. I stroll along the promenade on Frishman Beach. Normally I'd eat at Greko, a Greek restaurant overlooking the Mediterranean Sea. But it's boarded up. Matthew Morgenstern, Professor of Aramaic at Tel Aviv University, sets out what Israelis are facing now. 'Starting with Gulf War One in 1991, I've been through almost 35 years of wars here. But I've never experienced anything like this. Every single day, hundreds of people on the home front have lost their homes. 'It seems that they only need to get one missile through a day and the damage is done. I've been calling this 'Iranian Roulette' – will we be the ones to be hit this time?' The mullahs are hoping that these attacks will force the Israeli government into abandoning the fight. I'm sceptical. Throughout the day I trade messages and calls with a former defence official still in regular contact with the government and the security services. He sums up the mood here. 'The people of Israel are incredibly determined and defiant,' he tells me. 'Despite the awful price we are paying personally, physically, emotionally, there is still wall-to-wall support for this operation. Netanyahu is not a popular prime minister here. But after almost two years of fighting wars against Islamic death cults on seven fronts, all backed by Iran, the people of Israel are saying enough is enough.' I feel that sentiment all around me. It hangs in the air like the salt I smell drifting over from the Mediterranean Sea. Two events over the past week have hardened resolve yet further. The first is the killing of a seven-year-old Ukrainian girl, Nastya Buryk , and her family in an Iranian strike on the coastal town of Bat Yam. Nastya had come to Israel from Odesa for cancer treatment along with her grandmother Lena and two cousins, Konstantin, nine, and Ilya, 13, all of whom were killed alongside her. Her mother Maria is still beneath the rubble. The second is Thursday's missile attack on Soroka Hospital, in the southern city of Be'er Sheva, which serves the entire Negev region, not least the many Palestinians who go especially to be treated there. According to Israel's ministry of health, 71 people have been injured. The people are enraged. But they also know this cannot last for ever. And there is one question that naturally comes to the Israeli mind: will the Americans get involved? Well, the Israelis are certainly keen that they do. 'This is Trump's Churchillian moment,' the former Israeli defence official tells me. 'He has the opportunity, with a day or two's work, to strike at the heart of the worst and most destabilising regime since the end of the Second World War. 'You don't want the world's most dangerous weapons in the hands of the world's most dangerous regime. 'Israel has already done most of the work. Trump can and must finish the job.' Trump can indeed finish the job. As John Spencer, Chair of Urban Warfare Studies at the Modern Institute at West Point, told me on my podcast, the US has 'one of the quickest solutions to the remaining nuclear sites. The massive ordnance penetrator, the GBU-57 – a 30,000lb bunker-busting munition that can penetrate 200ft into concrete and reinforced steel.' Moreover, as Spencer also pointed out, it can only be deployed by the US B-2 bomber. 'This is really the only military solution, and only an American bomb dropped from an American plane can deliver it,' he said. But is it certain to destroy nuclear facilities buried deep in the mountains? And will Donald Trump sanction its use? So far the signs are mixed. Trump has been deploying the plural pronoun on social media, claiming 'we' – rather than Israel alone – have achieved extraordinary feats against the mullahs. Trump remains wary of war. But, clearly, the urge to claim credit for what is – so far – an extraordinary military operation is pressing on him. He's given the ayatollahs two weeks to make a deal. This is probably no surprise. If there's one thing Donald Trump enjoys more than making a deal, it's making a deal when the other side is so desperate he can put them over a barrel. He's betting that the mullahs, getting smashed up daily by Israel, need respite. He's betting that he can exploit this fact to demand terms so tough that Iran's path to a nuclear bomb is blocked, at least for now. But Iran's leadership also have a say. And they run a dictatorship, not a democracy. Concede too much and they risk emboldening enemies, not least their own people. For a regime built on projecting strength and fear, humiliation is fatal. If the mullahs refuse to fold, Trump may well decide to step in at the final moment and then take the credit. If the Israelis are defiant, they are also confused. In going after Iran's nuclear programme, they are doing the world a service. 'We are happy to take them out ourselves,' a friend told me as we drank smoothies in a cafe just off Dizengoff in central Tel Aviv. 'But why can't you just give us your moral support? We're doing this for everyone.' She's right. As German Chancellor Friedrich Merz recently observed: 'This is the dirty work that Israel is doing for all of us.' And yet, it seems we struggle to acknowledge even that. From our own government we hear the usual cringeworthy calls for calm and 'de-escalation'. Don't they understand how ridiculous they sound? If Britain, with all its history and expertise and capabilities, has truly given up on trying to influence world events then it's better to just say nothing. Now is not the time to back down. The question is simple. What would we in Britain do if a country had for decades promised to wipe us off the face of the Earth? What would we do if that country paid for proxy groups to launch thousands of rockets over decades at our towns and cities – at our children? If it provided the funding and training for the biggest massacre of British people since the Second World War? What would we in Britain demand that our government do? The answer is unequivocal: bring that regime to an end. The Israelis are just trying to take out Iran's nuclear programme – to everyone's benefit.

Times

an hour ago

• Times

How Israel could go it alone without US bunker buster bombs

The United States appears to have sent two B-2 stealth bombers to a military base in the Indian Ocean. The decision to send the warplanes, shortly after sending the USS Nimitz aircraft carrier to the region, could be a last minute negotiating tactic or a prelude to war. The bombers, which were probably making their way to Guam or the Diego Garcia military base, are equipped with the capability to use 'bunker buster' bombs which could offer the best chance of taking out Iran's Fordow nuclear facility. However, President Trump is still uncommitted for the time being to offensive action and is talking up diplomacy. If the president is unwilling to use his assets in the region to attack Iran, the question arises of how far the Israelis might be able to go on their own. Several targets, including the heavy-water reactor at Arak and the most important uranium enrichment plant, Natanz, have already been struck. The boss of the International Atomic Energy Agency has confirmed that the centrifuges there were stopped so abruptly by airstrikes that they have been 'severely damaged if not destroyed altogether'. But other key sites are believed to remain intact, including the Isfahan Nuclear Technology Centre and the uranium enrichment plant deep underground at Fordow. The first of these (also a subterranean facility) is thought to have been the storage site for the 400-plus kilograms of uranium already enriched close to weapons grade. The second site is home to the most secure processing facilities available to the Islamic Republic. So, what are the other options? Expert opinion seems divided. Yoav Gallant, Israel's defence minister until last year, in an article in the Free Press co-authored with Sir Niall Ferguson, argued, 'only one air force has the power to finish off Fordow … only America can do this'. Gallant, however, like many on the Israeli side, wants to draw the Americans in, and US attacks on this and other deeply buried facilities might turn out to be more a question of delaying for longer than completely eliminating Iran's nuclear programme. Even if America does join in the assault, Fordow's centrifuges, shielded by 80-90 metres of rock, may prove invulnerable to its 'bunker buster' — the massive ordnance penetrator or GBU-57 bomb which is rated as effective down to 60m. Speaking on an Israeli podcast, Zohar Palti, Mossad's former analytical chief, said of Fordow: 'It would be better if the Americans strike there. They truly have the capacity to make the place 'evaporate', and I chose that word deliberately.' The phrasing was chilling, hinting that a tactical or low-yield nuclear weapon might be the only way to ensure its destruction. The idea of a nuclear weapon being used, something the White House would not rule out this week, seems like an extraordinary escalation but might be threatened at this stage as another attempt to intimidate Iran into making concessions. It's fascinating also that the Mossad veteran implied that a deep penetration unconventional weapon was a capability the US has, but not Israel. If President Trump's desire to avoid another Middle Eastern war means he sits this one out, it's possible the Israelis may have secretly produced a better penetrator weapon than its publicly acknowledged inventory suggests. There's also been some speculation — shades of blowing up the Death Star — that Fordow has an Achilles heel, a ventilation shaft that could provide a pathway for a bomb. But so far Israel has not attempted an assault on Fordow. David Albright, an American academic who's spent many years looking at Iranian nuclear sites, is one of those who's more upbeat about the chances of putting it out of action, saying 'Israel doesn't need the United States to come in with bunker busters and destroy it … Israel can do it on its own'. He argues that destroying generators, ventilation systems and so on at Fordow's other support plant could wreck the centrifuges inside in the same way that Natanz's were. It's noteworthy also that this week Israel bombed the factory where new enrichment machines are made. If all else fails, it's likely that the Israelis also have a plan to attack Fordow using ground forces. Their main airborne formation, the 98th Paratroopers Division, was withdrawn from Gaza earlier this month to be ready for action elsewhere. Israeli C-130 transport planes have also been seen over Syria, apparently on missions to or from Iran. There could be many reasons for those flights, for example to set up refuelling points for Israeli aircraft or ferry their forward air controllers to or from operations. But the suppression of Iran's air defences has been so extensive that it may soon be viable to mount the type of airlift needed to insert a force of several thousand troops to a forward mounting base near Fordow. It could be that a desire to retain the option of such a mission lies behind the fact that the tunnel entrances of the complex have not yet been attacked. They might need to be used by an assault force after all. This type of operation, though, would be fraught with difficulty — indeed in the view of Gallant and Ferguson it's 'not realistic'. There are thousands of Iranian troops deployed around the plant, so casualties could be high. Although the quantity of explosive needed to destroy it from the inside out might be a lot less than bombing it, it would remain considerable. While the Israelis are likely to have developed numerous plans, Iran may still hold some wild cards. 'All enriched materials have been transferred and are in secure locations,' Major General Mohsen Rezaie of the Revolutionary Guard Corps said earlier this week. He added: 'We will come out of this war with our hands full.' Many believe Iran has indeed dispersed its stockpile of highly enriched uranium from Isfahan to other sites too. A third uranium enrichment site at a secret location is believed to have been under preparation when the conflict started. What all the 'kinetic' options require — from GBU-57 bombs to ground forces — is an continuing onsite inspection regime to ensure that in the months or years to come Iran's nuclear project is not reconstituted. That might be necessary even in the 'regime change' scenario: note that international organisations are currently trying to secure the remnants of Syria's chemical arsenal. At talks with the UK, France, and Germany in Geneva on Friday, Iran showed both its willingness to engage on these issues but also its refusal to give up uranium enrichment. That's a longstanding position which is, so far, unchanged by the war. This refusal to bend may be sufficient for President Trump, mindful of the political divisions within his Maga movement, to say that a deal is impossible, despite his recent attempts to pressure Iran into one. His line last week — saying 'I may or may not' attack — may also simply have been stalling for time while final military deployments went ahead. Evidently Pentagon planners have wanted to head off various contingencies if, for example, Iran were to retaliate against their bases or diplomatic facilities in the region. But with the arrival of two stealth bombers, alongside two aircraft carriers and soon a number of F-22 stealth fighters and tanker planes, Trump will be able to deliver a final ultimatum to Iran. When that happens, the question of whether Israel can take out Fordow and other key facilities on its own may become academic.