The logic behind oil price pricing is changing, Goldman Sachs: Gold prices may break through $5,400 by the end of the year

According to CCTV Finance on April 1, under the influence of the Middle East situation, the international Brent crude oil futures prices surged about 63% in March, marking the largest monthly increase since 1988. Currently, news about the Middle East situation is changing rapidly every day, but analysts point out that even if the conflict ends tomorrow, oil prices are unlikely to return to pre-conflict levels in the short term. First, the market’s risk pricing for crude oil trading has already shifted.

Andy Lipo, President of Lipo Petroleum Consulting: “If the conflict ends tomorrow, oil prices could immediately drop by $10 to $15 per barrel, but I don’t think they will return to the pre-conflict level of about $65 per barrel, because the market has already begun to price in a higher geopolitical risk premium for the entire Middle East region. The market will think that since Iran was able to block the Strait of Hormuz before, it could happen again in the future.” Second, there are issues with the supply chain. Analysts point out that even if the Strait of Hormuz reopens immediately, restoring the entire supply system will take time, including repositioning oil tankers, adjusting shipping routes, restoring production capacity, and restarting refineries.

Against the backdrop of rising oil prices, international gold futures fell more than 10% in March, marking the largest monthly decline since June 2013 and ending an eight-month consecutive upward trend. Goldman Sachs pointed out that, in the short term, if the Strait of Hormuz remains disrupted, gold may still face further selling pressure; but from a medium- to long-term perspective, the outlook remains bullish, with gold expected to rise to $5,400 per ounce by the end of 2026.