Morning Highlights: Oil Dips as Iran Claims Control; Goldman Sees $54 Brent by Q4 2026

Monday, January 12, 2026

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MARKET SNAPSHOT

Oil pulled back from last week's rally as Iran said it had regained control following the biggest anti-government demonstrations in years. Brent crude fell $0.47 to $62.87/bbl, while WTI dropped $0.49 to $58.63/bbl as of 6:15 AM EST.

"Lower European equity markets and lack of additional supply disruptions is moderately weighing on oil prices, following a strong rally at the end of last week," said UBS analyst Giovanni Staunovo.

Both benchmarks rose over 3% last week in their biggest gain since October as Iran's clerical establishment cracked down on the largest demonstrations since 2022, though protests escalated over the weekend.

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TOP DEVELOPMENTS

Iran: "Total Control" Claimed, Trump Weighs Military Options

Tehran's Claim: Iran's Foreign Minister Abbas Araqchi said Monday the situation is "under total control" after widespread weekend demonstrations. However, more than 500 people have been killed in the civil unrest, a rights group said Sunday.

Trump's Response: President Trump warned of possible military intervention in response to Iran's violent crackdown and is expected to meet senior advisers Tuesday to discuss options, a U.S. official told Reuters.

"The military is looking at it, and we're looking at some very strong options," Trump told reporters on Air Force One Sunday night. Trump also said Iran now wants to negotiate after his threat to strike the country over protester killings.

Market Underpricing Risk: While a premium has formed in oil prices recently, the market is still underestimating geopolitical risk from a wider Iran conflict that may affect oil shipments in the Strait of Hormuz, said Saul Kavonic, head of energy research at MST Marquee.

"The market is saying, 'Show me the disruption to supply', before materially responding," he added.

Iran's claim of control reduces immediate supply disruption fears, hence today's pullback. However, with over 500 dead and Trump considering military action, the situation remains volatile and could escalate quickly.

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VENEZUELA: EXPORTS TO RESUME SOON, RACE FOR TANKERS UNDERWAY

Venezuela is expected to resume oil exports soon following Maduro's ouster, as Trump said last week Caracas will turn over as much as 50 million barrels of sanctioned oil to the U.S.

Operational Scramble: This has triggered a race among oil companies to find tankers and prepare operations to ship crude safely from vessels and dilapidated Venezuelan ports, four sources familiar with operations said.

In Friday's White House meeting, Trafigura said its first vessel should load in the next week, indicating near-term Venezuelan supply additions are imminent.

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GOLDMAN SACHS: OIL PRICES "LIKELY TO DRIFT LOWER" IN 2026

Bearish Forecast Reaffirmed: Goldman Sachs said in a Sunday note that oil prices are likely to drift lower this year as a wave of supply creates market surplus, although geopolitical risks tied to Russia, Venezuela, and Iran will continue driving volatility.

Price Targets:

• 2026 Average: $56/bbl Brent, $52/bbl WTI (unchanged)

• Q4 2026 Bottom: $54/bbl Brent, $50/bbl WTI as OECD inventories build

• 2027 Average: $58/bbl Brent, $54/bbl WTI ($5 lower than prior estimate)

• 2030-2035 Average: $75/bbl Brent, $71/bbl WTI ($5 below previous estimate)

Surplus Forecast: "Rising global oil stocks and our forecast of a 2.3 million bpd surplus in 2026 suggest that rebalancing the market likely requires lower oil prices in 2026 to slow down non-OPEC supply growth and support solid demand growth, barring large supply disruptions or OPEC production cuts."

Supply Upgrades Driving Bearishness: Goldman cited upgrades to 2027 supply in the U.S., Venezuela, and Russia by 0.3, 0.4, and 0.5 million bpd, respectively. The Venezuela upgrade (400,000 bpd) reflects expectations of production recovery following U.S. involvement.

Political Pressure: U.S. policymakers' focus on strong energy supply and relatively low oil prices will keep sustained price upside in check ahead of the midterms, Goldman noted.

No OPEC Cuts Expected: Goldman expects no OPEC production cuts despite geopolitical risks and low speculative positioning. Risks to price forecasts are skewed modestly to the downside given potential further increases in non-OPEC supply.

Trading Recommendation: "We still recommend investors short the 2026Q3-Dec2028 Brent time-spread to express the 2026 surplus view, and oil producers hedge 2026 price downside."

Long-Term View: Goldman expects substantial price recovery later this decade as demand grows through 2040 after years of low long-cycle investment, but the recovery starts from a lower base than previously forecast.

Bottom Line: Goldman's bearish stance reinforces the fundamental narrative we've been tracking. Their Q4 2026 target of $54 Brent suggests current prices near $63 have significant downside ahead.

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ADDITIONAL SUPPLY RISKS LOOM

Investors are also watching disruption risks from Russia amid Ukraine's attacks targeting energy facilities and prospects of tougher U.S. sanctions on Russian energy (the legislation Senator Graham said got Trump's green light last week).

However, these potential disruptions are being weighed against the overwhelming supply additions expected from Venezuela (immediate: 50 million barrels; medium-term: 300,000-500,000 bpd production increases) and continued non-OPEC growth.

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BOTTOM LINE

Oil is giving back some of last week's 3% gain as Iran's claim of control eases immediate supply fears and the market refocuses on bearish fundamentals. Goldman's Sunday note crystallizes the bear case: 2.3 million bpd surplus in 2026, prices bottoming at $54 Brent in Q4, and no OPEC cuts expected. The investment bank upgraded 2027 Venezuelan supply by 400,000 bpd, reflecting expectations that U.S. involvement will genuinely revive production. The immediate addition of 50 million barrels from Venezuelan storage (Trafigura possibly loading next week) adds near-term supply pressure. Iran remains a wildcard with over 500 protesters killed and Trump considering military options, but the market is in "show me" mode regarding actual supply disruption. MST Marquee's Kavonic is right that the market underprices Strait of Hormuz risk, but traders have grown numb to geopolitical threats without actual barrel removal. Brent at $62.87 and WTI at $58.63 keeps both benchmarks in the middle of the expected range, but Goldman's $54/$50 Q4 targets suggest significant downside if their surplus forecast materializes. Without OPEC+ cuts (which Goldman doesn't expect) or genuine sustained supply disruption (Iranian protests disrupting production, not just killing protesters), the path of least resistance is lower. Watch tomorrow's Trump adviser meeting on Iran options and this week's Venezuelan loading progress. The fundamental backdrop remains overwhelmingly bearish despite episodic geopolitical rallies.