Goldman Sachs has reported that the risk of crude oil supply disruption in the Middle East has fallen significantly to just 4%, following a ceasefire agreement between Israel and Iran earlier this week. This development has calmed market fears, with options traders now assigning a 60% likelihood that Brent crude will average between $60 and $70 per barrel over the next three months. There is also a 28% chance that the benchmark price could exceed $70 per barrel during this period, according to Reuters.

Several key factors are influencing these revised market expectations. Goldman Sachs highlighted the absence of any actual disruption to oil supplies during the latest military tensions in the Middle East. Additionally, both the U.S. and China appear motivated to prevent oil prices from rising significantly, given the potential economic consequences. Another factor is the anticipated build-up of global oil inventories later this year, which could ease price pressures.

Earlier this week, however, Goldman Sachs had warned of a far more concerning scenario in which Brent crude prices could surge above \$100 per barrel. This would have been triggered if Iran had blocked the Strait of Hormuz, a vital oil transit chokepoint. The bank's analysts explained that if oil flows through the strait were reduced by half for a month, followed by a sustained 10% reduction over the next 11 months, the benchmark price could initially spike but would eventually stabilize around \$95 per barrel by the final quarter of 2025.

With tensions now easing, oil market forecasts are being rapidly revised. ING analysts, for example, expect the OPEC+ alliance to agree to increase output by an additional 411,000 barrels per day at their upcoming meeting on July 6. This potential boost in supply is expected to further stabilize the market, reinforcing the recent downward adjustment in perceived supply risks.