(Bloomberg) — Goldman Sachs Group Inc. lifted its oil-price forecasts as the prolonged closure of the Strait of Hormuz spurs “extreme” inventory draws.
Brent is expected to average $90 a barrel in the fourth quarter, up from a previous outlook for $80, analysts including Daan Struyven and Yulia Zhestkova Grigsby said in an April 27 note. The bank also hiked forecasts for the current and third quarters, the latest in a series of revisions.
“We estimate that 14.5 million barrels a day of Persian Gulf crude production losses are driving global oil inventories to draw at a record 11 to 12 million barrel-a-day pace in April,” they said. “Because extreme inventory draws are not sustainable, even sharper demand losses could be required if the supply shock persists longer.”
The global oil market has been upended by the Iran war, with a double blockade of the Strait of Hormuz cutting daily transits through the key chokepoint to near zero. With millions of barrels of daily supply shut-in across the region, Brent has rallied by almost 50% since the start of the conflict in late February, threatening to lift global inflation while stunting growth.
“We now assume a normalization in Gulf exports by end-June, versus mid-May prior, and a slower Gulf production recovery,” the analysts said. “The economic risks are larger than our crude base-case alone suggests because of the net upside risks to oil prices, unusually high refined-product prices, products shortages risks, and the unprecedented scale of the shock.”
Given the disruption, the bank said there would be a deficit of 9.6 million barrels a day this quarter, compared with a surplus last year.
Brent was seen at $100 a barrel this quarter and $93 in the third under the new outlooks. Futures last traded just below $108 a barrel, on course for a sixth daily gain, potentially the longest winning run of more than a year.
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