Brent crude oil prices could rise above $85 a barrel in the short-term if the latest round of U.S. sanctions against Moscow lead to lower Russian oil output, Goldman Sachs said on Sunday.
Prices could touch $90 a barrel if the decline in Russian output coincides with a reduction in Iranian production, the bank said.
U.S. President Joe Biden imposed the broadest package of sanctions so far targeting Russia's oil and gas revenues on Friday, in an effort to give Kyiv and Donald Trump's incoming administration leverage to reach a deal for peace in Ukraine.
Brent crude prices were trading at over $81 a barrel as of 0333 GMT on Monday after surging more than 3% on Friday following the wider U.S. sanctions on Russian oil.
Traders and analysts said the sanctions on Russian producers and ships may force Chinese and Indian refiners to source more oil from the Middle East, Africa, and the Americas, increasing oil prices and freight costs.
The investment bank estimates that the vessels affected by the new sanctions moved 1.7 million barrels of oil per day in 2024, making up 25% of Russia's exports, primarily of crude oil.
While the sanctions could boost oil prices, Goldman Sachs kept its base case scenario unchanged, predicting that Brent crude prices will range between $70 and $85 per barrel this year.
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Russia can discount its oil prices to incentivize shipping by a dynamic shadow fleet to price-sensitive buyers, analysts at Goldman Sachs said, justifying their unchanged price forecast.
Russia could also refine more of its oil domestically and increase fuel exports to ease constraints on oil shipments, they said.
The analysts noted that incoming President Donald Trump's administration will want to avoid a persistent drop in Russian oil supply due to its goal to lower U.S. energy prices.
Trump will be sworn in as president of the United States on Jan. 20. (Reporting by Anushree Mukherjee in Bengaluru; Editing by Sonia Cheema)