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<Research>G Sachs: Probability of Major Crude Oil Supply Disruption Has Nosedived; Mkt Expects Large Inventory Builds from Fall
Oil prices have recently returned to pre-Middle East tension levels, with Brent crude falling back to just over USD60 per barrel and the geopolitical risk premium retreating from a...
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<Research>G Sachs: Probability of Major Crude Oil Supply Disruption Has Nosedived; Mkt Expects Large Inventory Builds from Fall
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Oil prices have recently returned to pre-Middle East tension levels, with Brent crude falling back to just over USD60 per barrel and the geopolitical risk premium retreating from a peak of around USD15 per barrel to less than USD1 per barrel, according to Goldman Sachs' research report.

In Goldman Sachs' estimates, the likelihood of a major crude oil supply disruption, such as the closure of the Strait of Hormuz, has decreased greatly, and the geopolitical risk premium has quickly receded. Options market data also shows that traders are seeing the risk of a major supply disruption in the short term as extremely low.

Related NewsCiti: Potential Supply Disruption in Middle East, Reduced Gas Feedstock Supply May Affect Chemical Output
On the inventory front, the broker said that the market expects substantial inventory builds from the fall, which will ease concerns over supply shortages and dampen market players' willingness to bet on rising oil prices.

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