Crude oil set for best week since March 2023 on fears Israel will strike Iran oil industry

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Though oil prices have surged this week on geopolitical tensions, they have risen from a low baseline.

Oil prices would spike by $10 to $20 per barrel if an Israeli strike knocks out 1 million barrels per day of Iranian production over a sustained period, according to Goldman Sachs.U.S. crude oil is on pace for its best week since March 2023, after President Joe Biden indicated that thea possible strike by Israel on Iran's crude facilities in retaliation for Tehran's ballistic missile attack earlier this week.

Just how high prices would go depends on whether OPEC uses its spare oil capacity to plug the gap, Struyven said.November contract: $74.27 per barrel, up 56 cents, or 0.76%. Year to date, U.S. crude oil has gained more than 3%.December contract: $78.26 per barrel, up 64 cents, or 0.82%. Year to date, the global benchmark has risen more than 1%.

"Geopolitical risk premium priced into oil markets until basically today was quite moderate," Struyven said. Brent prices at around $77 per barrel are still below Goldman Sachs' view of what constitutes fair value based on inventory levels, he said.t because there haven't been sustained supply disruptions over the past two years despite high geopolitical tensions, Struyven said.

 

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