Key Takeaways:
Goldman Sachs cut its oil price forecasts as Gulf crude supply rebounds to 63% of normal levels, sending Brent crude back to prewar territory.
Goldman Sachs reduced its oil price forecasts as tanker traffic through the Strait of Hormuz resumed, with total Gulf oil exports rebounding to 63% of normal levels, according to the bank's analysis. Brent crude fell 1.1% to $73.10 a barrel in European trading Thursday, while West Texas Intermediate slid 0.9% to $69.70 a barrel — both benchmarks approaching levels last seen before the Iran conflict erupted.
"The market is likely extrapolating the swift, thus far, recovery of Mideast supply and already pricing expected future surpluses," Samantha Dart, co-head of global commodities research at Goldman Sachs, said on CNBC's "Squawk on the Street." "Beyond the spot-price selloff, the market is increasingly challenging its prior assumption that long-dated prices need to incorporate a sticky security premium."
The rapid normalization has pushed the Brent futures curve into contango, with the September contract trading above the August contract — a structure "much more typical of a huge supply surplus instead of the exceptionally low global stockpiles that currently exist," analysts at Ritterbusch & Associates said. The shift marks a dramatic reversal from the war premium that had pushed Brent above $100 a barrel earlier this year. European energy stocks tracked crude lower, with Italy's Eni sliding 1%, BP dropping 0.8% and Shell edging 0.5% lower in London trading.
The supply recovery carries implications beyond crude prices. Iran is pushing to charge for security, safety and environmental services in the Strait of Hormuz, estimating the arrangement could generate $40 billion a year in revenue for states involved, according to officials familiar with the matter. The regime is studying global models including Turkey's gold franc tax on Dardanelles passage. For oil markets, the key question is whether the supply normalization can sustain — or whether the current contango structure is overcorrecting for a market that still holds historically low global stockpiles, as Ritterbusch noted. The most actively traded Brent futures contract, which expires July, fell 1.3% to $72.88 a barrel Thursday, while WTI has dropped nearly 30% so far this month.
This article is for informational purposes only and does not constitute investment advice.
