Goldman Sachs has evaluated potential downside risks to global oil prices, specifically for crude and refined products. The investment bank links these risks to a hypothetical scenario: the lifting of international sanctions against Russia’s oil sector. A Russia-Ukraine peace deal could potentially trigger such a development.
Potential Impact of Sanctions Relief
Analysts at Goldman Sachs estimate significant downward pressure on crude prices if sanctions were to ease. Refined oil product prices, however, appear particularly susceptible to declines. The removal of restrictions on Russian oil exports would likely increase global supply, consequently pressuring market prices.
Refined Products Face Greater Vulnerability
The bank highlights refined products as especially vulnerable. Their prices could experience more pronounced drops than crude oil. This distinction suggests a larger market rebalancing for processed fuels, impacting various global sectors.
Goldman Sachs’ Current Outlook
Despite these potential risks, Goldman Sachs’ current base case scenario does not anticipate an immediate lifting of sanctions. Their projections assume existing sanctions on Russian oil will remain in place. This continuity forms a cornerstone of their market outlook.
Furthermore, the bank projects a continued downward trend in Russia’s oil production. This reduction in output helps mitigate global supply concerns. Additionally, Goldman Sachs anticipates a decline in the Brent/WTI price complex, reflecting their overall market expectations under the status quo.
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