Oil May Hit $90 On Russia Curbs And Iran Output Cut

Brent crude oil prices could rise above $85 a barrel in the short-term if the latest round of US sanctions against Moscow leads to lower Russian oil output, Goldman Sachs said on Sunday.

Prices could touch $90 a barrel if the decline in Russian output coincides with a reduction in Iranian production, the bank said.

US president Joe Biden imposed the broadest package of sanctions so far targeting Russia’s oil and gas revenues on Friday, in an effort to give Kyiv and Donald Trump’s incoming administration leverage to reach a deal for peace in Ukraine.

Brent crude prices were trading at over $81 a barrel as of 03:33 GMT on Monday after surging more than 3 percent on Friday following the wider US sanctions on Russian oil.

Traders and analysts said the sanctions on Russian producers and ships may force Chinese and Indian refiners to source more oil from the Middle East, Africa and the Americas, increasing oil prices and freight costs.

The investment bank estimates that the vessels affected by the new sanctions moved 1.7 million barrels of oil per day in 2024, making up 25 percent of Russia’s exports, primarily of crude oil.

While the sanctions could boost oil prices, Goldman Sachs kept its base case scenario unchanged, predicting that Brent crude prices will range between $70 and $85 per barrel this year.

Russia can discount its oil prices to incentivise shipping by a dynamic shadow fleet to price-sensitive buyers, analysts at Goldman Sachs said, justifying their unchanged price forecast.

Russia could also refine more of its oil domestically and increase fuel exports to ease constraints on oil shipments, they said.

The analysts noted that the incoming Trump administration will want to avoid a persistent drop in Russian oil supply due to its goal to lower US energy prices.

Trump will be sworn in as US president on January 20.