Goldman, Morgan Cut Oil Forecasts on Iran Tanker Deal

Goldman Sachs and Morgan Stanley reduced their 2025 crude oil price forecasts after the United States and Iran reached a framework to lift tanker sanctions. Traders had been pricing in a war-risk premium of $5–7 per barrel on Brent crude they expected to last through the third quarter. The interim deal now points to Iranian exports returning to normal within weeks.

Iran's oil minister told state media the country could ramp production to 4 million barrels a day within 45 days, matching its pre-sanctions capacity from 2018. The framework, details still being finalised late Wednesday, removes the fog of war around tanker movements.

Brent crude traded near $78 a barrel before the agreement fell to $74.30 on the announcement. West Texas Intermediate dropped to $70.10. Goldman Sachs reduced its third-quarter Brent average estimate to $75 from $82, analysts at the bank wrote in a note. Morgan Stanley cut its forecast to $73 from $80.

The front-month backwardation in Brent collapsed from $1.20 a barrel last week to 35 cents Thursday morning. The market is pricing the new supply as immediate.

A bigger near-term factor is the floating storage overhang. Iran stored roughly 40 million barrels of crude on tankers near Malaysia and Singapore during the sanctions period. That oil, which could not be sold because no tanker insurer would touch a cargo without a U.S. waiver, can now move. The clearing of that floating inventory will add around 800,000–900,000 barrels per day of spot crude to the physical market over the next two months, traders at three trading houses said. That overhang will weigh on medium-sour grades like Basrah Heavy and Iran's Light crude, which compete directly with Saudi Arab Medium and Russia's Urals.

The read-through for other producers is sharp. Saudi Arabia faces the biggest near-term risk. It had been producing 9 million barrels a day, keeping 500,000 bpd of spare capacity offline to support prices. With Iranian barrels flooding back, the Saudis may either cut output further – something they resisted during the last OPEC+ meeting – or accept lower prices. Riyadh chose the latter path in 2016 and 2020, both times triggering price wars. The difference this time is the U.S. administration's stated preference for lower gasoline prices ahead of midterm elections. Riyadh has historically read the political room.

Russia's Urals crude, which already trades at a $12–15 discount to Brent due to sanctions, will likely see that widen. Some traders expect the discount to grow to $18–20 a barrel if Iranian crude displaces Russian barrels in Chinese refineries, two trading sources said. Russia had been the top supplier to China in 2024. Iran will compete on that margin directly.

The biggest swing factor remains the timing of the tanker clearance. Shipping data from Vortexa and Kpler show 28 Iranian tankers laden with crude sitting off southeast Asia. If those vessels discharge within 60 days, the market faces a supply surge larger than anything since the 2020 OPEC+ supply collapse.

OPEC+ meets June 4. The group had planned to begin unwinding 2.2 million barrels per day of voluntary cuts starting July 1. Several delegates said that timeline is now under review. The Persian Gulf recovery is accelerating the timeline for a price defence, they said.

The data on Iranian export volumes for May will be published by S&P Global Commodity Insights in the first week of June. For a broader look at commodities analysis, including how these flows affect other crude grades, read the full market context.