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First Post
34 minutes ago
- Business
- First Post
Israel-Iran war could set oil markets in fire, Goldman Sachs sees $10 per barrel spike
Goldman Sachs recently revised its assessment of geopolitical risk in oil markets, suggesting that Brent crude prices could climb by approximately $10 per barrel due to conflict in West Asia read more The escalation of hostilities between Israel and Iran has rattled global oil markets, with major financial institutions such as Goldman Sachs forecasting a significant spike in oil prices. According to analysts, the uncertainty surrounding regional stability, especially with the potential involvement of the United States, is poised to inject volatility into oil pricing, which had recently settled into relative calm. Geopolitical unrest alters price projections Goldman Sachs recently revised its assessment of geopolitical risk in oil markets, suggesting that Brent crude prices could climb by approximately $10 per barrel due to conflict in West Asia. This would place Brent above the $85 per barrel mark, rising from levels in the mid-$70s, as reported by Irina Slav. The bank noted that if Iranian oil supply were disrupted more severely prices could surge even further, possibly exceeding $90 per barrel. In particular, Goldman highlighted vulnerabilities in oil transport through strategic chokepoints such as the Bab el-Mandeb Strait, previously targeted by Yemen's Houthi rebels. These flashpoints illustrate the broader risks to oil infrastructure in a highly combustible region. STORY CONTINUES BELOW THIS AD Threat of US involvement intensifies market jitters Adding to market unease is the potential for the United States to enter the conflict. President Donald Trump has publicly flirted with the idea of US intervention, stating ambiguously, 'I may do it. I may not do it.' Though Trump has acknowledged internal political resistance to renewed military engagement in West Asia citing criticism from Republican figures like Steve Bannon, he also emphasised the threat of a nuclear Iran as a possible justification for action. As a result, traders are adopting a cautious stance. Oil prices initially dipped slightly amid the uncertainty with Brent crude settling at $76.56 per barrel and West Texas Intermediate (WTI) at $75.22, awaiting clearer US policy signals. War escalation sends prices climbing Events quickly shifted on the ground. Oil prices surged nearly 3 per cent as of June 19 following Israel's direct strikes on Iranian nuclear sites and Iran's retaliatory missile barrage, which included an attack on an Israeli hospital. Brent crude closed at $78.85 per barrel, its highest since January, while WTI climbed to $77.20. These strikes marked a dramatic escalation, dispelling any illusions of a short-lived skirmish. Israeli Prime Minister Benjamin Netanyahu vowed that Iran's leaders would 'pay the full price,' while Tehran warned against foreign nations—implicitly the US—joining the fray. Rory Johnston, analyst and founder of Commodity Context, said market consensus is tilting toward US participation in the conflict, which would significantly compound the risks to oil infrastructure and supply routes. Strategic chokepoints and oil supply at stake Iran's role as the third-largest oil producer in OPEC places it at the heart of this crisis. With a production output of approximately 3.3 million barrels per day, Iran remains a crucial supplier—particularly to China, which absorbs the majority of its 2 million daily barrels of crude exports. More critically, the Strait of Hormuz—a narrow passage bordering southern Iran—serves as the gateway for 18 to 21 million barrels of oil and oil products each day. RBC Capital analyst Helima Croft emphasised that this waterway could become a primary target if Iran perceives an existential threat. She warned that attacks on tankers and energy installations would likely follow any US military involvement. STORY CONTINUES BELOW THIS AD JP Morgan went further, positing a worst-case scenario in which conflict spreads across the broader region and leads to the closure of the Strait. Under such circumstances, oil prices could spike to between $120 and $130 per barrel. Risk premiums and market sentiment Goldman Sachs reiterated its position that a geopolitical risk premium of around $10 per barrel is now reasonable, considering the lower availability of Iranian oil and potential for wider supply disruption. Even in the event of a de-escalation, it believes that Brent prices will not return to the low $60s seen in the recent past. Similarly, Barclays warned that if half of Iran's oil exports were halted, Brent could hit $85 per barrel. A broader war could push prices past the $100 threshold. Price Futures Group analyst Phil Flynn noted that the market had been lulled into a 'complacency' that has now been shattered. 'The market has been underplaying geopolitical risk,' he said, arguing that this latest flare-up will keep prices elevated as long as uncertainty remains. Temporary or sustained price hike? Despite the price spike, some observers maintain that any surge will likely be short-lived. DBRS Morningstar, in a note released Thursday, cautioned that higher oil prices might hurt the global economy by intensifying tariff-related pressures and suppressing demand. In their view, once the conflict recedes, the war premium would deflate and oil prices could cycle lower. Nonetheless, the potential for prolonged instability keeps the market on alert. With no clear exit strategy from either Israel or Iran, and Washington's decision on intervention still pending, investors are bracing for further upheaval. Opec+ response and the global oil balance In response to the emerging tensions, Russian Deputy Prime Minister Alexander Novak advised the Opec+ alliance not to overreact. Speaking at an economic forum in St Petersburg, Novak recommended that oil producers stick to current plans to increase supply in light of rising summer demand. His comments sought to reassure markets and prevent price volatility from spiralling further. Yet, whether Opec+ output increases will be enough to stabilise prices amid the shockwaves of a regional war remains to be seen. Market dynamics are now driven more by geopolitical risk than traditional supply and demand fundamentals. STORY CONTINUES BELOW THIS AD A market on the edge The Israel-Iran conflict represents a potential inflection point for global energy markets. Analysts from Goldman Sachs to JP Morgan are now factoring in a war risk premium, with oil prices already trending upward and possibly heading for triple digits if the situation worsens. The spectre of US military involvement could dramatically shift the balance, not only disrupting Iranian exports but also imperiling vital shipping routes. While some believe any price surge would be short-lived, the combination of strategic vulnerability and political unpredictability suggests that volatility will persist for the foreseeable future. Whether oil prices stabilise or soar above $100 per barrel may ultimately depend not just on battlefield developments, but on decisions yet to be made in Washington.
Time of India
34 minutes ago
- Business
- Time of India
Rupee gains slightly to cap week clouded by Middle East conflict
The Indian rupee ended modestly higher on Friday but fell for a second consecutive week as the conflict between Iran and Israel remained the key driver for global markets and kept energy prices elevated, pressuring oil-sensitive currencies in Asia. The rupee ended at 86.5850, up from its close of 86.7225 in the previous session. It was down nearly 0.6% on the week. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like If You Eat Ginger Everyday for 1 Month This is What Happens Tips and Tricks Undo While escalating tensions in the Middle East kept risk appetite under pressure for much of the week, markets found some relief on Friday after U.S. President Donald Trump pushed back a decision on U.S. military involvement in the Israel-Iran war. Brent crude oil prices declined more than 2% on the day after rallying to a five-month high of $79.04 per barrel earlier in the week. Most equity gauges in Asia logged gains, with India's benchmark equity indexes, the BSE Sensex and Nifty 50 , rising 1.3% each. Live Events Analysts pointed out that oil prices and the Middle East conflict would likely remain the key drivers for FX markets in the near term. On the day, the dollar index was a tad lower at 98.6 but was on course for a weekly gain. "The FX market has taken the somewhat lower probability of the U.S. intervening in Iran already this weekend as an opportunity to re-enter USD short positions, especially against European currencies," ING Bank said in a note. "This confirms that a constant flow of oil-positive, risk-negative geopolitical news is needed to keep the dollar supported," the note added. For the rupee, meanwhile, traders will also gauge the extent of portfolio inflows that a large IPO scheduled next week will draw. Sizeable inflows could help the rupee hold ground above the 86.50 mark while a sharp rise in crude oil prices could build momentum for a fall below 87, a trader at a foreign bank said.
Economic Times
39 minutes ago
- Business
- Economic Times
Rupee gains slightly to cap week clouded by Middle East conflict
The Indian rupee ended modestly higher on Friday but fell for a second consecutive week as the conflict between Iran and Israel remained the key driver for global markets and kept energy prices elevated, pressuring oil-sensitive currencies in Asia. ADVERTISEMENT The rupee ended at 86.5850, up from its close of 86.7225 in the previous session. It was down nearly 0.6% on the week. While escalating tensions in the Middle East kept risk appetite under pressure for much of the week, markets found some relief on Friday after U.S. President Donald Trump pushed back a decision on U.S. military involvement in the Israel-Iran war. Brent crude oil prices declined more than 2% on the day after rallying to a five-month high of $79.04 per barrel earlier in the week. Most equity gauges in Asia logged gains, with India's benchmark equity indexes, the BSE Sensex and Nifty 50 , rising 1.3% each. Analysts pointed out that oil prices and the Middle East conflict would likely remain the key drivers for FX markets in the near term. On the day, the dollar index was a tad lower at 98.6 but was on course for a weekly gain. ADVERTISEMENT "The FX market has taken the somewhat lower probability of the U.S. intervening in Iran already this weekend as an opportunity to re-enter USD short positions, especially against European currencies," ING Bank said in a note. "This confirms that a constant flow of oil-positive, risk-negative geopolitical news is needed to keep the dollar supported," the note added. ADVERTISEMENT For the rupee, meanwhile, traders will also gauge the extent of portfolio inflows that a large IPO scheduled next week will draw. Sizeable inflows could help the rupee hold ground above the 86.50 mark while a sharp rise in crude oil prices could build momentum for a fall below 87, a trader at a foreign bank said. ADVERTISEMENT (You can now subscribe to our ETMarkets WhatsApp channel)
Zawya
40 minutes ago
- Business
- Zawya
Kuwait crude oil up $1.29 to $77.46 pb
KUWAIT -- The Kuwaiti crude oil price rose by USD 1.29 during Thursday's trading to reach USD 77.46 per barrel (pb),compared with USD 76.17 pb the day before, Kuwait Petroleum Corporation (KPC) said Friday. Brent futures also rose by USD 2.15 to USD 78.85 pb and West Texas Intermediate went up by USD 2.06 to USD 77.20 pb. All KUNA right are reserved © 2022. Provided by SyndiGate Media Inc. (
Hans India
an hour ago
- Business
- Hans India
Need to safeguard oil and gas supply chains amid geopolitical uncertainties: Report
New Delhi: With India projected to grow at over 6 per cent annually and its primary energy demand increasing at a CAGR of 5.5 per cent, there is an urgent need to safeguard oil and gas supply chains amid rising geopolitical and market uncertainties, according to a report released on Friday. Over 85 per cent of India's crude oil needs are met through imports, positioning the country as the world's third-largest oil importer. 'Geopolitical instability, especially in chokepoints like the Hormuz Strait and Suez Canal, threatens consistent crude supply and pricing,' said the report by the PHD Chamber of Commerce and Industry (PHDCCI). Brent crude prices are forecast to decline from $81 per barrel in 2024 to $66 per barrel in 2026, driven by supply expansion outside OPEC+ and moderate demand growth. 'India's economic growth trajectory demands resilient and diversified energy sources. This report provides an integrated roadmap to navigate future energy challenges while ensuring affordability, accessibility, and sustainability,' said Hemant Jain, PHDCCI President. The industrial sector now consumes approximately 40 per cent of India's total energy, making it the largest single energy-consuming sector in 2023. 'Over past three decades, industrial energy demand has tripled, and industry accounts for approximately 36–38 per cent of final energy consumption,' the report noted. Currently, India' domestic oil and gas production is centred in Assam, Gujarat, Rajasthan, Mumbai High and the Krishna Godavari Basin. Hydrocarbon Exploration and Licensing Policy (HELP) launched in 2016 has simplified approval processes, with attractive fiscal terms, and bolstered licensing and exploration activity. By mid-2024, 144 blocks covering approximately 243 000 km² had been awarded, though international companies have largely avoided participation, favouring other countries with more attractive terms. Offshore production is set to increase thanks to additional supplies from ONGC's deepwater KG-D5 project between 2025 and 2030. However, offshore (and overall) gas supply growth will be tempered by plateauing output from the KG-D6 fields and declining production from legacy assets like ONGC's Mumbai offshore fields. According to recent reports, India may be inching closer to a game-changing offshore oil discovery in the Andaman Sea — one that could hold as much as 184,440 crore litres of crude oil and rival Guyana's transformational find, Union Petroleum and Natural Gas Minister, Hardeep Singh Puri, has hinted. According to projections, India's natural gas production is also expected to rise to 54.7 BCM by FY 2029-30.
