Goldman Sachs said that if Iran's oil production is affected, oil prices could rise by $20 per barrel.

Due to concerns that Israel may retaliate against Tehran's missile attack earlier this week, targeting Iran's oil industry, U.S. crude oil futures rose about 5% on Thursday and continued to rise on Friday morning.

Daan Struyven, co-head of global commodities research at Goldman Sachs, said in an interview on Friday that if Iran sees a sustained daily production decline of 1 million barrels, it is expected that oil prices will peak at around $20 per barrel next year.

Struyven added that this is assuming OPEC+ does not respond by increasing production. If major OPEC+ members like Saudi Arabia and the UAE offset some of the production losses, the oil market may experience a slight increase below $10 per barrel.

Since the start of the armed conflict between Israel and Hamas, disruptions in the oil market have been limited, with oil prices under pressure due to increased production in the U.S. and weak demand from Asia.

However, market sentiment may be shifting this week. Following Iran's ballistic missile attack on Israel, U.S. crude oil prices rose for the third consecutive trading day, intensifying regional tensions. Recently, industry observers have issued warnings, cautioning about actual threats to supply.

Iran, as an OPEC member, is an important participant in the global oil market. It produces nearly 4 million barrels of oil per day, and if Iran's oil infrastructure becomes a target for Israeli retaliatory measures, an estimated 4% of the world's supply could be at risk.

MST Marquee's senior energy analyst Saul Kavonic mentioned the potential risks of Iran's Kharg Island, which accounts for 90% of the country's crude oil exports. 'A bigger concern is that this could be the start of further escalation of the conflict, which could impact transportation through the Strait of Hormuz,' he added.

Other analysts echoed this view, suggesting that if Israel strikes Iran's oil industry, the interruption of supplies through the Strait of Hormuz would be a concern.

Iran had previously threatened that if its oil sector is affected, it would disrupt the flow through the Strait of Hormuz.

According to data from the U.S. Energy Information Administration, this strait between Oman and Iran is a crucial passage, with approximately one-fifth of global daily oil production passing through here. This strategically significant waterway connects the oil-producing countries of the Middle East with major global markets.

When asked on Thursday whether the U.S. would support Israel's strike on Iran's oil facilities, U.S. President Biden responded, 'We're discussing that issue. I think ... it's a bit tricky.' Oil price analysts believe these remarks are driving the price surge.

In a report released by Fitch Solutions' BMI on Wednesday, it stated, 'In the event of full-blown conflict, Brent crude prices could surge to over $100 per barrel, with any blockade of the Strait of Hormuz potentially threatening prices of $150 per barrel or higher.'

BMI analysts stated that while the likelihood of full-scale war is 'relatively low,' the risk of a miscalculation by any party has now increased.

While some industry analysts believe that OPEC+ has sufficient spare capacity to compensate for disruptions in Iran's exports if Israel strikes Iran's oil infrastructure, the world's spare oil capacity is mainly concentrated in the Middle East, especially in Gulf countries. If the conflict escalates further, these countries could also face risks.

Editor/ping