Goldman Sachs warns renewed tensions threaten oil supply recovery

Goldman Sachs warned that renewed tensions could disrupt the recovery in Middle East oil supplies if they interfere with shipping through the Strait of Hormuz.

According to the bank's estimates, crude oil production in the Arabian Gulf remained about 10.5 million barrels per day (bpd) below pre-war levels in June, Bloomberg reported.

In a note, Goldman Sachs said although Middle Eastern producers began reopening shut-in wells last month, any disruption to shipping through the Strait of Hormuz could slow the pace of production recovery.

The bank also noted that oil flows through the Arabian Gulf fell to around 70% of normal levels following recent attacks on oil tankers.

This came after flows had recovered to more than 80% of pre-war levels during the first 10 days after the Strait of Hormuz reopened.

The bank's analysts said the latest tanker attacks underscore persistently elevated risks, as shippers may remain reluctant to transit the waterway amid the uncertain ceasefire, weighing on oil flows through the Strait of Hormuz in the near term.