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Goldman Sachs, a global investment bank, has downplayed the impact of the military conflict between Israel and Hamas on oil reserves. Neither Israel nor its neighboring countries are direct oil producers. However, if the conflict escalates, a rise in international oil prices is inevitable.
In an investment note on the 11th, Goldman Sachs analyzed, “The military conflict between Israel and Hamas will not have a significant impact on short-term oil market inventories,” and added, “The possibility of normalizing relations between Saudi Arabia and Israel and the possibility of increasing Saudi oil production has decreased due to this attack.”
International oil prices fluctuated as Israel launched air strikes on the Gaza Strip in Palestine in retaliation for Hamas’ attack. On the 9th (local time), West Texas Intermediate (WTI) crude oil for November delivery traded at $86.38 per barrel, up $3.59 (4.34%) from the previous session at the New York Mercantile Exchange.
Goldman Sachs viewed the short-term risk to oil supply as limited, as neither Israel nor its neighboring countries are major oil producers. It continues to forecast Brent oil prices to rise to $100 by June 2024, adding that there will be no impact on the initial stages of global oil production.
However, some speculate that if the military conflict between Israel and Hamas expands to other regions, it could directly impact the oil market.
Morgan Stanley suggested, “If the military conflict expands to other countries, the situation could change,” and added, “Expectations for the normalization of relations between Israel and Saudi Arabia have decreased, which could lead Saudi Arabia to pursue a less aggressive oil policy.”
Goldman Sachs emphasized, “The risk of heightened tensions across a wider region due to this conflict has increased,” and “The risk to Iran’s production outlook is now skewed downside.”
It further added, “If Iran’s production in 2024 decreases by 100,000 barrels per day compared to the baseline, the price of Brent crude oil will rise by more than $1 per barrel by the end of 2024.”
Meanwhile, as the situation in the Middle East becomes unstable, predictions continue that international oil prices will exceed $100 per barrel within the year. Mike Wirth, CEO of Chevron, is confident of reaching $100 within the year, and global financial companies like Citigroup and Bank of America (BOA) are also supporting this view.
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