Goldman Sachs believes that oil prices face a double risk due to reduced Middle East oil supply caused by the Iran war, coupled with declining demand.
Analyst Daan Struyven noted in a report on May 31 that combined oil sales data from China and Western Europe for April suggest the bank’s already low expectations for monthly oil demand face a downward risk of about 2 million barrels per day. This puts the forecast for Brent crude oil prices at $90 per barrel in the fourth quarter at risk of declining by approximately $10 per barrel.
The Iran conflict has disrupted the global oil market, sharply reducing oil shipments from Persian Gulf producers through the Strait of Hormuz and causing millions of barrels of oil to be shut in. Since the outbreak of hostilities in late February, the benchmark Brent crude price has risen by more than a quarter, leading to a sharp drop in demand—particularly for aviation fuel and petrochemical feedstocks.
Goldman Sachs analysts said: “We believe that continued reductions in Middle East supply could pose a significant risk of price increases; however, weak demand also presents a considerable risk of price declines. Actual end-user oil demand may be more strongly affected by rising prices and decline more than expected.”
As this war has revealed just how much oil demand has disappeared—and may not recover—China’s oil imports are expected to fall to their lowest level since the pandemic. London-based consultancy Energy Aspects Ltd. forecasts that China, the world’s largest crude oil importer, could import as little as 10.9 million barrels per day this year.
On Monday, Brent crude futures approached $93 a barrel, after closing at a six-week low on Friday, as markets remained optimistic about a potential peace deal between the United States and Iran.
Technical Analysis:
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Gold: After testing resistance at 4,600 and pulling back, the price is currently consolidating around 4,500/4,530. There is no clear demand zone support in this area, so we are not pursuing a direct buy strategy. For today, we will monitor the potential sweep through two key liquidity clusters below: the first at 4,500/4,480 and the second at 4,450/4,430. For precise levels, please consult the plugin.
(Gold 15-minute chart)
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Nasdaq: Prices continue to fluctuate upward, but after reaching new highs, we do not recommend immediate buying. For the day, maintain a sweeping approach around the 30,100/30,200 zone, and only re-evaluate bullish signals once this range is cleared. For detailed positioning, please consult the plugin.
(NASDAQ 15-minute chart)
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Crude oil: The overnight price rebound failed below 95, and prices instead broke through the 90 level. Today, we will continue to monitor signals of a pullback after the upward surge in liquidity. For detailed levels, please consult the plugin.
(Crude Oil 15-minute Chart)
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Today’s key financial data and events to watch:
16:00 Eurozone May manufacturing PMI final value
16:30 UK May Manufacturing PMI (Final)
17:00 Eurozone April unemployment rate
22:00 U.S. May ISM Manufacturing PMI
