Oil Prices Increase#
Oil prices saw a rise in volatile trading on Monday, staying near recent highs after U.S. President Donald Trump announced a 48-hour deadline for Iran to reopen the Strait of Hormuz. Brent oil futures climbed 0.6% to $112.91 a barrel, while West Texas Intermediate (WTI) crude futures increased by 0.8% to $99.05 a barrel.
U.S. Actions and Global Supply Concerns#
The focus remains on the U.S. and its allies' efforts to mitigate supply disruptions linked to Iran. Over the weekend, the U.S. granted a 30-day waiver for purchasing Iranian oil that was already in transit. The head of the International Energy Agency, Fatih Birol, warned that the current crisis could surpass the oil crises of 1973 and 1979.
Trump’s Deadline and Iran's Response#
On Saturday, Trump stated that Iran must reopen the Strait of Hormuz within 48 hours or face severe consequences, including the potential destruction of vital energy infrastructure. In response, Iran threatened to close the Strait entirely and target energy and water systems in neighboring Gulf countries. Reports indicated that Iran launched new strikes on Israel early Monday.
Goldman Sachs Adjusts Oil Price Forecast#
Goldman Sachs has revised its oil price forecast for the second time in two weeks, now predicting Brent crude to average $110 per barrel in March and April, up from an earlier estimate of $98 per barrel. Analysts from the bank believe that oil flows through the Strait of Hormuz could remain significantly reduced for an extended period, leading to a higher risk premium in the market. They also forecast that Brent crude will average around $85 per barrel by 2026, an increase from their previous estimate of $77.