Goldman Sachs sees Brent crude gradually easing back to the low $70s later in the year; however, if the disruption to oil flows proves longer-lasting, oil prices could reach higher peaks and end the year at higher levels, a Reuters report said.
Goldman Sachs expects Brent oil to average over $100 a barrel in March and $85 in April as energy prices remain volatile due to the Iran war, damage to Middle East energy infrastructure, and disruptions in the Strait of Hormuz.
Goldman said a two-month disruption of the Strait of Hormuz, which has been effectively shut since the start of the US-Israel war on Iran on February 28 and through which one-fifth of the world’s oil and natural gas supply passes, would push its fourth quarter average Brent price estimate from $71 a barrel to $93 a barrel.
Crude futures turn positive
Crude futures climbed higher on Friday as the Strait of Hormuz remained closed. Brent futures for May settled at $103.14 a barrel, up $2.68, or 2.67%. U.S. West Texas Intermediate (WTI) crude for April finished at $98.71 a barrel, up $2.98, or 3.11%.
Prices were down early on Friday on an erroneous report that an Indian-flagged tanker had sailed through the Strait of Hormuz, which has been shut since the war began.
Once it became clear that the tanker had sailed from Oman and had not passed through the strait, prices began rising, turning positive before midday.
Allowing Russian oil
As part of efforts to lower fuel prices to consumers in an election year, the U.S. issued a 30-day license for countries to buy Russian oil and petroleum products stranded at sea. Treasury Secretary Scott Bessent said it was a step to stabilise global energy markets roiled by the US-Israeli war on Iran.
This will affect 100 million barrels of Russian crude, equal to almost a day’s worth of global output, according to Russia’s presidential envoy Kirill Dmitriev.
“Russian oil was already going to buyers; this is not bringing additional barrels to the market but it does reduce some friction,” analysts told Reuters.