Goldman Sachs Sees More Oil Gains as US-Iran Attacks Escalate

Summary

Goldman Sachs' Samantha Dart explains why oil prices can extend gains as US-Iran hostilities tighten Persian Gulf supply. Visible exports have dropped well below normal, and the conflict-driven tightening is expected to persist. She also discusses alternative export routes and the debated possibility of Iran tolling the Strait of Hormuz.

• Persian Gulf oil exports fell from ~80% to below 50% of normal after the latest escalation.
• The direction of supply is tightening, supporting further oil price increases.
• Saudi East-West pipeline and UAE Fujairah pipeline flows have helped bypass the Strait of Hormuz.
• Dark vessel crossings and deliveries suggest total exports are slightly higher than visible transits suggest.
• Iran is attempting to control Strait of Hormuz traffic, with industry clients discussing a potential toll.
• A toll of ~$1/barrel is seen by many clients as a small price to avoid war, but the outcome remains unclear.