Oil prices reflecting slim chance of supply disruption, fading risk premium, Goldman says

[Data analyzing in commodities energy market: the charts and quotes on display. US WTI crude oil price analysis. Stunning price drop for the last 20 years.]
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The probability of a major oil supply disruption such as a closure of the Strait of Hormuz estimated from options has retreated to just 4% following the Israel-Iran ceasefire, Goldman Sachs analysts said in a note.

Fears that Iran could close the vital waterway after last weekend's U.S. strikes on its nuclear facilities sent Brent crude futures spiking to as high as $81.40/bbl on Monday, but concerns eased suddenly following the truce that was declared the next day, sending crude back below $68/bbl.

"The sharp drop in the geopolitical risk premium likely reflects traders' recent experiences with major geopolitical shocks without significant oil disruptions, Iran's restrained response, strong U.S. and China incentives to avoid large disruptions, and the likely shift to large inventory builds from the fall," Goldman wrote.

The estimated geopolitical risk premium in the spot market has now fallen to below $1/bbl from its Sunday peak of near $15/bbl, the analysts said.

Option markets are forecasting a 60% chance that Brent crude will stay in the $60s in three months and a 28% probability of exceeding $70/bbl, and the market's most likely outcome for December 2025 also is that prices stay in the $60s, according to Goldman, which added that Brent likely would climb to $90/bbl if oil flows through the Strait of Hormuz actually were disrupted.

The week ended with three straight sessions of modest gains in crude oil, but they were nowhere near enough to avoid heavy weekly losses as the Israel-Iran ceasefire and avoidance of supply disruptions took much of the geopolitical risk premium out of the price.

Oil futures are "moving into a consolidation pattern" with support from tighter U.S. inventories, a weaker dollar and the start of the driving season, while greater OPEC+ production is a negative, BOK Financial's Dennis Kissler wrote in a note. "The market seems to be placing value at very near the same levels as before the Iranian conflict started."

Oil prices closed slightly higher on Friday, recovering from a midday drop following a report that OPEC+ was weighing another super-sized oil output boost [https://www.bloomberg.com/news/articles/2025-06-27/opec-is-set-to-weigh-another-super-sized-oil-output-increase] in August.

Eight key OPEC+ members have agreed on 411K bbl/day increases in each of the previous three months, and several delegates reportedly are ready to consider the same hike again for August when the cartel convenes on July 6.

This week, front-month Nymex crude (CL1:COM [https://seekingalpha.com/symbol/CL1:COM]) for August delivery closed -11.3% to $65.52/bbl and front-month Brent crude (CO1:COM [https://seekingalpha.com/symbol/CO1:COM]) for August ended -12% to $67.77/bbl, in the largest one-week net and percentage decline for both benchmarks since March 17, 2023.

Also this week, front-month Nymex RBOB gasoline (XB1:COM [https://seekingalpha.com/symbol/XB1:COM]) for July delivery settled -10.3% to $2.0898/gal and front-month July heating oil (HO1:COM [https://seekingalpha.com/symbol/HO1:COM]) finished -9.2% to $2.3072/gal.

On Friday, Nymex crude rose 0.4%, Brent added less than 0.1%, Nymex gasoline fell 0.4%, and Nymex heating oil lost 2.2%.

U.S. natural gas futures (NG1:COM [https://seekingalpha.com/symbol/NG1:COM]) rebounded Friday after five straight sessions of losses, as the August front-month contract gained 6% but ended -5.3% on the week to $3.739/MMBtu.

ETFs: (NYSEARCA:USO [https://seekingalpha.com/symbol/USO]), (BNO [https://seekingalpha.com/symbol/BNO]), (UCO [https://seekingalpha.com/symbol/UCO]), (SCO [https://seekingalpha.com/symbol/SCO]), (USL [https://seekingalpha.com/symbol/USL]), (DBO [https://seekingalpha.com/symbol/DBO]), (DRIP [https://seekingalpha.com/symbol/DRIP]), (GUSH [https://seekingalpha.com/symbol/GUSH]), (USOI [https://seekingalpha.com/symbol/USOI]), (UNG [https://seekingalpha.com/symbol/UNG]), (BOIL [https://seekingalpha.com/symbol/BOIL]), (KOLD [https://seekingalpha.com/symbol/KOLD]), (UNL [https://seekingalpha.com/symbol/UNL]), (FCG [https://seekingalpha.com/symbol/FCG])

Energy stocks, as represented by the Energy Select Sector SPDR Fund (NYSEARCA:XLE [https://seekingalpha.com/symbol/XLE]), were the worst performing group this week, -4.1%.

Top 10 gainers in energy and natural resources in the past 5 days: Ascent Solar Technologies (ASTI [https://seekingalpha.com/symbol/ASTI]) +106.4%, Geospace Technologies (GEOS [https://seekingalpha.com/symbol/GEOS]) +38.3%, Korea Electric Power (KEP [https://seekingalpha.com/symbol/KEP]) +32.1%, Eco Wave Power (WAVE [https://seekingalpha.com/symbol/WAVE]) +28.2%, Critical Metals (CRML [https://seekingalpha.com/symbol/CRML]) +25.3%, Fuel Tech (FTEK [https://seekingalpha.com/symbol/FTEK]) +23.8%, Ivanhoe Electric (IE [https://seekingalpha.com/symbol/IE]) +22.7%, Enovix (ENVX [https://seekingalpha.com/symbol/ENVX]) +20.2%, Solaredge Technologies (SEDG [https://seekingalpha.com/symbol/SEDG]) +19.8%, Sunrun (RUN [https://seekingalpha.com/symbol/RUN]) +19.2%.

Top 10 decliners in energy and natural resources in the past 5 days: Robin Energy (RBNE [https://seekingalpha.com/symbol/RBNE]) -45.2%, Indonesia Energy (INDO [https://seekingalpha.com/symbol/INDO]) -38.3%, Stem (STEM [https://seekingalpha.com/symbol/STEM]) -23.1%, Vital Energy (VTLE [https://seekingalpha.com/symbol/VTLE]) -20.6%, VivoPower International (VVPR [https://seekingalpha.com/symbol/VVPR]) -20.3%, Opal Fuels (OPAL [https://seekingalpha.com/symbol/OPAL]) -20%, Mexco Energy (MXC [https://seekingalpha.com/symbol/MXC]) -20%, Prairie Operating (PROP [https://seekingalpha.com/symbol/PROP]) -18.9%, Houston American Energy (HUSA [https://seekingalpha.com/symbol/HUSA]) -18.8%, Marine Petroleum Trust (MARPS [https://seekingalpha.com/symbol/MARPS]) -17.6%.

Source: Barchart.com

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