Goldman Sachs warns that continued Israel-Iran conflict could surge oil prices

The big-bank corporation Goldman Sachs has argued that the continuation of the Israel-Iran crisis could lead to a surge in the price of oil globally.

Samantha Dart, the Co-Head of Global Commodities Research at Goldman Sachs, served as a spokesperson for the company's economic analyst team on an interview with Paul Allen of Bloomberg's The Asia Trade. Dart came on the show to connect the continued conflict between Iran and Israel to a steep rise of oil prices in the future, particularly when it comes to the mutual damage between the countries in bombing raids and other forms of devastation. "Iran has increased its supply by just about a million barrels a day over the past couple of years. And if you remove a million barrels a day of production from Iran, this could represent an upside of about $8 a barrel to the crude oil price," Dart affirmed.

Even in regards to other global factors like American domestic production of oil and low Chinese demand for oil, Dart added, "And can we also consider the potential factor of US supply and demand as well? I mean, obviously President Trump is on the record saying he wants low oil prices, but he also wants strong US oil domestic production. Is it possible to have both? So when we talk to U.S. oil and gas producers, they react to market prices more than anything else. And yes, if you have WTI prices below $60 a barrel, this is a big deal for producers. And it's not just me saying we just have to look at the rig count in in the U.S. and oil drilling has come off significantly since the year has started. I mean, another factor for the reason for these weak prices we're seeing are concerns around demand in China. And it's not just demand for oil. I'd be interested in your views on Chinese LNG demand as well. Longer term, can you see it picking up? What's your outlook for perhaps not this year, but for the coming years, maybe even the coming decade? Yeah, that's a very good point. Year to date, China demand for it for LNG has been exceptionally low, ever comparable to the lock down year of 22."

The combination of both the Israel-Iran conflict and also other global dilemmas has, according to Dart from Goldman Sachs, been projected to raise oil prices if trends continue. Higher oil prices would impact consumers first, especially lower-class consumers who would face mass-unaffordability of products as well as higher expenses. In addition, companies small and large could face greater difficulties adapting to higher oil prices, ranging from mass layoffs to transportation expenses.

Currently, the price of crude oil per barrel has hovered around $62-63, however Dart and other analysts have projected this price to increase, but however Dart did acknowledge that external factors could contradict price rises and even contribute to a shortfall. Nevertheless, the supply of oil is on the line through the Middle Eastern conflict.