Oil’s war premium just got served a big haymaker on June 12, following reports that U.S. and Iranian officials had agreed on a peace-deal text, according to The Washington Post.
Naturally, that raised hopes that the Strait of Hormuz could reopen, a major artery for global oil supplies
Traders expected the Iran conflict to keep crude elevated, especially given Hormuz’s role in nearly one-fifth of global oil and gas flows. However, according to Yahoo Finance reporting, Brent settled down 3.4% at $87.33, while WTI fell 3.2% to $84.88, as diplomacy suddenly looked more powerful than disruption. That’s when Goldman Sachs added a new wrinkle.
According to a Reuters report, the bank’s latest oil forecast suggests the market may be focusing too much on the current war shock and not enough on what could follow. That raises the question for investors: will oil’s next big move be driven by conflict or by something the market has been slow to price in? What Goldman Sachs changed in its oil forecast Goldman Sachs analysts were always of the opinion that the oil market remains vulnerable to a fleshed-out supply shock from the Iran war and Strait of Hormuz disruptions.