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<Research>G Sachs Estimates Real-time Risk Premium of USD18/ bbl for Oil Prices
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The Strait of Hormuz, which typically carries one-fifth of the world's crude oil and liquefied natural gas (LNG) supply, appears to have been gravely disrupted, Goldman Sachs said in its report. Numerous shippers, oil producers, and insurers have adopted a cautious wait-and-see mode with reports of multiple vessel damages. Goldman Sachs is assessing the upside risks to energy prices due to developments in the Middle East. At this juncture, the base case energy price forecast remains unchanged, assuming no prolonged supply disruptions. Based on a 15% leap in retail oil prices over the weekend, Goldman Sachs estimated a real-time risk premium of USD18/ bbl in oil prices. This is roughly equivalent to the estimate of the fair value effect of a six-week full halt in Strait of Hormuz flows. If only 50% of the flow is disrupted for a month, this estimated impact would moderate to an increase of USD4/ bbl. However, if the market demands a premium for more prolonged supply disruption risks, oil prices could leapfrog. AASTOCKS Financial News Website: www.aastocks.com |
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