KEY POINTS
- Iran says diplomatic contacts with the United States are continuing through mediators, although no breakthrough agreement has been reached.
- Goldman Sachs has raised its December Brent crude forecast from $90 to $105 per barrel.
- The bank also increased its 2027 Brent forecast from $80 to $88 per barrel.
- Analysts warn that renewed military action could threaten oil infrastructure and supplies across the Gulf.
- Energy analyst Jeff Currie says uncertainty around the Strait of Hormuz could keep future oil deliveries expensive.
MAIN STORY
Diplomatic efforts to end the conflict involving Iran have continued, but concerns about potential disruptions to global oil supplies have prompted Goldman Sachs to raise its crude price forecasts.
Iranian Foreign Minister Abbas Araghchi said consultations with the United States through mediators were ongoing, following discussions involving Iranian and Qatari representatives.
“Consultations through mediators are very intensive,” Araghchi said in comments reported by Iran’s state-run media outlet IRNA.
He added that Tehran had presented its conditions and proposals, with the outcome depending on Washington’s response.
China and Russia have also spoken against a full resumption of hostilities, according to statements from their foreign ministries.
Despite these diplomatic developments, Goldman Sachs analysts led by Daan Struyven have raised their December Brent crude forecast to $105 per barrel from $90.
The bank also increased its projection for 2027 Brent prices to $88 per barrel from its previous estimate of $80.
The analysts said that although Middle Eastern oil production was recovering as expected, the possibility of further supply disruptions justified a higher price outlook.
They warned that renewed US military strikes on Iran could target nuclear facilities, missile installations near the Strait of Hormuz or wider civilian energy infrastructure, including power plants.
Such attacks could trigger Iranian retaliation against energy infrastructure in the Gulf, further tightening global oil supplies.
Goldman Sachs said the risk of escalation, uncertainty over a lasting diplomatic settlement and the potential long-term effects of supply shocks could keep the oil risk premium elevated.
Energy analyst Jeff Currie, formerly head of global commodities at Goldman Sachs, also warned that prolonged uncertainty could leave oil markets facing difficulties securing future deliveries.
He described the possibility of a situation in which the Strait of Hormuz remains neither fully open nor completely closed, leaving uncertainty around the movement of oil supplies.
THE ISSUES
The Strait of Hormuz is an important route for oil shipments from Gulf producers to international markets. Any disruption to shipping through the waterway could affect global supply and push up crude prices.
The latest developments highlight the difference between diplomatic progress and the actual removal of supply risks. Even with negotiations continuing, the possibility of renewed military action remains a concern for oil market participants.
Goldman Sachs’ revised projections also reflect the potential for supply disruptions to have effects beyond the immediate period of conflict.
For Nigeria, sustained high international crude prices could support government revenue and foreign exchange earnings, provided domestic production and exports remain stable. However, higher global energy costs could also increase pressure on fuel prices, transportation and business operating expenses.
WHAT’S BEING SAID
“Consultations through mediators are very intensive.” – Abbas Araghchi, Iranian Foreign Minister.
“We have presented our conditions and proposals and everything depends on the political rationality of Washington.” – Abbas Araghchi, Iranian Foreign Minister.
“Although Mideast output continues to recover as expected, we are raising our crude oil price forecasts because substantial downside supply risks are likely to sustain a large near-term risk premium.” – Daan Struyven and Goldman Sachs analysts.
“The compromise is managed instability, with Schrödinger’s Strait at the heart of it: a Strait that is neither open nor closed. That caps the prompt barrel. It does nothing to cheapen the next one.” – Jeff Currie, Energy Analyst and former Goldman Sachs global commodities chief.
WHAT’S NEXT
Developments in US-Iran negotiations and the security situation around the Strait of Hormuz will remain important to the oil market outlook.
A diplomatic agreement could reduce concerns about further supply disruptions, while renewed military action could threaten energy infrastructure and shipping routes across the Gulf.
Goldman Sachs’ revised forecasts suggest that supply risks will remain a major factor in oil pricing, even as production in the Middle East recovers.
BOTTOM LINE
Continued diplomatic contacts have not removed concerns about the impact of the Iran conflict on global oil supplies. Goldman Sachs has raised its price forecasts because the risk of renewed hostilities and disruption to Gulf energy infrastructure remains significant.
Source: Yahoo Finance
