Goldman Sachs: Oil prices have already priced in a disruption of Iranian supply, while expectations of increased supply from Venezuela are spreading.

Goldman Sachs States: The Global Crude Oil Market Has “Already Priced in the Risk,” With Iranian Supply Disruptions Expected On January 16, according to Chasing Wind Trading Desk, Goldman Sachs stated in its latest research report that Brent crude has risen nearly $6 per barrel this year to above $66 per barrel. Within its pricing framework, this increase equates to the market having priced in a sustained disruption of 700,000 barrels per day in Iranian-related supply over the next 12 months. The report also notes that options market data further confirms this risk premium: the probability of Brent crude's three-month forward contracts reaching the $70 range at expiry has surged from less than 7% two weeks ago to 15%, while the probability of surpassing $80 per barrel remains relatively low at 5%. Goldman also specifically noted another clue on the supply side: expectations of increased supply from Venezuela are brewing. Meanwhile, the quality price spread between heavy crude and light crude has widened by about $2 per barrel, which aligns with the assumption of “an increase of 300,000 barrels per day in Venezuelan heavy oil production by year-end.” Iranian Risk: Spot Prices Are Already Reflecting a “700,000 Barrels/Day Disruption” The report points out that the global crude oil market is pricing in a significant supply disruption risk related to Iran: Brent rising above $66 per barrel, nearly a $6/bbl increase since the beginning of the year, when combined with the pricing framework, is interpreted as the result of the market pricing in a sustained 700,000 barrels/day Iranian-related supply interruption over the next 12 months. Its framework provides another reference: If production falls permanently by 1 million barrels per day, the oil price (based on fair value from OECD inventories) usually rises by $8 per barrel 12 months after the shock occurs (assuming OPEC does not make up for the shortfall). Goldman points out that this essentially lays out the mapping relationship between “oil price risk premium” and “potential supply shortfall”: The current price increase does not correspond to an extreme supply cut, but rather a disruption magnitude the market deems likely to persist. Options Market: Probability for $70 Range Revised Upward Option market pricing is even clearer in reflecting such concerns. Data shows that the probability for Brent April futures contracts expiring in the $70 range has jumped from less than 7% two weeks ago to 15%, although the chance of breaching $80 per barrel remains moderate, steady at 5%. Meanwhile, the report mentions the call skew has risen to its highest level since late June 2025, when the U.S. struck Iran's nuclear facilities. This means the market is willing to pay more premium for upside protection, but the pricing for a “runaway surge” remains relatively restrained—risk has been priced in, but not to an extreme degree. Venezuela Supply Increase Recognized by the Market Despite rising concerns over Iranian supply disruption, Goldman Sachs still maintains its forecast for Iranian crude production to remain basically stable at 3.5 million barrels per day by 2026. In contrast to Iran, the market is pricing in increased supply from Venezuela. The research report notes that the quality price differential between heavy and light crude has expanded by about $2 per barrel, which aligns with Goldman’s forecast for Venezuelan heavy crude production to increase by 300,000 barrels per day by year-end. Goldman expects Venezuelan oil production to rise from 830,000 barrels per day in December 2025 to 1.07 million barrels per day in December 2026. ~~~~~~~~~~~~~~~~~~~~~~~~ The above excellent content is from Chasing Wind Trading Desk. For more detailed interpretation, including real-time commentary and frontline research, please join [Chasing Wind Trading Desk Annual Membership]. Risk Warning and Disclaimer The market presents risks; investments require caution. This article does not constitute personal investment advice and has not considered the specific investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article suit their specific situations. Investments made based on this information are at your own risk.