Goldman Sachs has warned that oil prices could surge by up to $20 per barrel if Iranian oil production faces a significant hit, following growing concerns of escalating conflict in the Middle East. This comes as U.S. crude futures rose 5% on Thursday and continued to climb on Friday after Iran launched a missile attack on Israel, raising fears of potential retaliatory strikes on Iran’s oil infrastructure.
Goldman’s Daan Struyven, co-head of global commodities research, said that a sustained drop of 1 million barrels per day in Iranian production could cause a peak oil price increase of $20 per barrel in 2024, provided OPEC+ members do not increase their output to offset the shortfall. However, if key producers like Saudi Arabia and the UAE step in, the price spike could be closer to $10 per barrel.
Since the Israel-Hamas conflict began in October of last year, oil prices had remained stable due to increased U.S. production and lower-than-expected demand from China. However, tensions flared this week after Iran’s missile strike, putting nearly 4% of the global oil supply at risk. The potential disruption of the Strait of Hormuz, a key transit route for one-fifth of the world’s oil, has further alarmed industry experts.
If Iran’s oil infrastructure becomes a target, global oil markets could see significant supply disruptions, pushing prices to new highs and further straining global energy markets.
