PNN – A new survey indicates that major U.S. banks have raised their oil price forecasts.
According to the report of Pakistan News Network; The Wall Street Journal reports that major U.S. banks have increased their oil price projections, as the deadlock in efforts to end the war against Iran leaves the energy market vulnerable to fresh supply shocks.
- $90 Oil Forecast for the Fourth Quarter
A Wall Street Journal survey—featuring input from Goldman Sachs, JPMorgan, and Morgan Stanley—indicates that the average price of Brent crude is projected to reach $90.22 and West Texas Intermediate (WTI) $85.47 in the fourth quarter; previous estimates stood at $78.92 and $74.62, respectively.
- Hormuz Remains a Market Pressure Point
Although Middle East oil exports—excluding Iran—have returned to pre-war levels, the diplomatic path toward reopening the Strait of Hormuz remains uncertain. This uncertainty keeps the market sensitive to any potential new supply disruptions.
- Saudi Arabia has eased some supply pressure
Saudi Arabia has resumed oil transport via the East-West pipeline following repairs to damage caused by drone attacks. This move has alleviated some pressure on regional supplies but has failed to dispel concerns regarding the future of the Strait of Hormuz and Iran’s nuclear negotiations.
- Oil prices climbed back above $100
In Wednesday’s trading, the Brent crude contract for November delivery rose 0.8% to $103.45, while the more actively traded December contract gained 2.5% to reach $98.61. West Texas Intermediate (WTI) crude also rose 1.9%, trading at $91.10.
- A new risk emerges from the diesel market
According to The Wall Street Journal, physical conditions in the fuel market have tightened, and the prospect of restrictions on U.S. diesel exports continues to loom over the market. Russia is also expected to extend its diesel export ban for another month—a move that could exert further pressure on the refined products market.
- China remains a decisive factor
Thus far, China has limited its need to purchase oil from the global market by relying on stockpiles accumulated prior to the war. However, China’s crude oil imports rose by 6 percent in September compared to August, and the trajectory of Chinese demand could play a significant role in shaping prices in the coming months.
- Rising Chinese demand is not the primary concern
Goldman Sachs believes that the greater risk to rising oil prices is not the growth of Chinese imports, but rather a renewed escalation of conflict and attacks on oil production and export facilities in the Middle East. Consequently, any fresh attack on energy infrastructure could once again subject the market to a supply shock.
- Conclusion
The lack of a clear outlook regarding the end of the war involving Iran and the reopening of the Strait of Hormuz remains the primary risk for the oil market. For this reason, major Wall Street banks have abandoned their previous forecasts and are projecting higher oil prices.