Wall Street banks lift oil-price forecasts as Iran war stalls

WSJ survey sees Q4 Brent at $90.22, WTI at $85.47 a barrel

A Wall Street Journal survey of Goldman Sachs, J.P. Morgan and Morgan Stanley has lifted fourth-quarter oil-price forecasts, with Brent crude now seen averaging $90.22 a barrel and West Texas Intermediate at $85.47, sharply above prior estimates of $78.92 and $74.62, respectively. The banks cited stalled efforts to end the Iran war and the market’s vulnerability to fresh supply shocks.

The physical supply picture has nonetheless improved, the Journal reported. Middle East crude exports excluding Iran are back at prewar levels, according to shipping-data provider Kpler, and Saudi Arabia has resumed shipments through its East-West pipeline after repairing damage from drone strikes. Still, the diplomatic path toward reopening the Strait of Hormuz and resuming talks over Iran’s nuclear program remains highly uncertain, leaving the market exposed to renewed disruptions.

Oil prices rebounded Wednesday as tensions in the Middle East remained high. Brent crude November futures gained 0.8% to $103.45 a barrel, while the more-active December contract climbed 2.5% to $98.61 a barrel, the Journal reported. Front-month WTI rose 1.9% to $91.10 a barrel.

The revisions come as tighter physical-market conditions feed inflation risks and prompt debate over potential export restrictions. The prospect of a U.S. diesel-export ban is hanging over the market, while Russia is expected to extend its diesel-export restrictions for another month, according to analysts cited by the Journal.

For the full year, the Journal survey sees Brent and WTI averaging $88.13 and $82.98 a barrel, respectively. In the first quarter of next year, analysts expect Brent to ease to $83.44 a barrel and WTI to $79.88 a barrel.

China’s role in the oil market remains difficult to gauge, with its demand trajectory likely to be a key swing factor over the coming year, market watchers told the paper. Beijing has so far leaned on stockpiles accumulated before the Iran conflict, limiting the need to buy additional crude on the international market.

That dynamic may be starting to shift. Chinese crude imports rose 6% in September from August levels, according to Goldman Sachs. The bank sees the bigger upside risk to oil prices coming from a renewed escalation targeting Middle East production and export infrastructure, rather than from stronger Chinese imports.