
Supply disruption concerns in the Middle East and investors' portfolio protection moves pushed the oil risk premium above 2022 levels.
According to Goldman Sachs analysis, supply concerns and portfolio protection trends originating from the Middle East increased the Brent oil risk premium to approximately $22 per barrel in September, reaching one of the highest levels in history.
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Supply disruption concerns in the Middle East pushed the oil risk premium to $22 in September, according to a Goldman Sachs analysis.
According to Goldman Sachs' analysis, concerns about supply disruptions in the Middle East increased the risk premium reflected in the price of Brent oil to approximately $22 per barrel in September. Thus, the impact of geopolitical risks in the oil market on prices reached the second highest monthly level in history.
In the bank's evaluation, it was noted that the increase in risk premium was not only due to concerns about oil supply. Investors who want to protect their portfolios against losses that may occur in the stock and bond markets have also increased their oil positions, which was among the factors affecting prices.
OIL'S RISK PREMIUM EXCEEDED THE LEVEL IN 2022
Goldman Sachs stated that the highest monthly oil risk premium calculated in 2022, when the Russia-Ukraine war started, remained below 16 dollars per barrel. The risk premium, which reached approximately $22 in September, revealed that the impact of the current supply shock on prices exceeded the levels of the previous major geopolitical crisis period.
Concern that developments in the Middle East may lead to interruptions in oil supply causes supply risks to be met with higher prices in the markets. This situation strengthens the determining role of geopolitical developments in the price of Brent oil.
DECREASE IN OIL STOCKS MAY INCREASE PRICES
According to Goldman Sachs, commercial oil stocks of OECD countries are among the main indicators that determine the basic value of Brent oil. The change in stocks can be a determinant on the direction of prices by directly affecting the balance of supply and demand in the market.
According to the bank's calculations, a 100 million barrel decrease in OECD commercial oil stocks increases the fair value of Brent oil, calculated based on supply and demand conditions, by approximately $8 per barrel. For this reason, the continuing decline in stocks stands out as one of the factors that may strengthen the upward pressure on oil prices.
INVESTORS ARE TURNING TO OIL TO PROTECT THEIR PORTFOLIO
Oil stands out not only as a part of the energy market in times of supply shocks, but also as one of the assets that investors turn to in order to protect themselves from financial risks.
In Goldman Sachs' analysis, it was stated that investors who want to balance possible losses in their stock and bond portfolios can increase their oil positions. One of the main reasons for this is that the rise in oil prices increases inflation concerns and may put pressure on the returns of traditional financial assets.
This trend also shows that price movements in the oil market cannot be explained only by physical supply and demand conditions. Geopolitical risks, stock levels and hedging transactions of investors come together and affect the price formation of Brent oil.
AI outlook — possibilities, not facts
The continued decline in OECD commercial oil stocks will strengthen the upward pressure on oil prices.
Likely · Within months

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