Goldman Sachs Predicts Crude Oil Spike Amid Potential Iran-Israel Conflict

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Goldman Sachs has warned that oil prices could rise by as much as $20 per barrel if Iranian oil production is hit due to Israeli retaliation for Iran’s recent missile attack. Oil prices are already on the rise, with U.S. crude futures climbing by 5% on Thursday and continuing to increase on Friday. The market is reacting to fears of disruptions to Iran’s significant oil output amid escalating tensions between Iran and Israel.

Daan Struyven, Goldman Sachs’ co-head of global commodities research, estimated that a sustained reduction of 1 million barrels per day in Iranian production could push oil prices up by about $20 per barrel next year, assuming that OPEC+ does not increase production to compensate. If major OPEC+ members like Saudi Arabia and UAE step in to offset the shortfall, the price rise could be closer to $10 per barrel.

Since the Israel-Hamas conflict began in October 2023, the oil market had remained stable due to increased U.S. production and low demand from China. However, the recent missile attacks by Iran have reignited concerns about supply disruptions. Iran produces about 4 million barrels of oil per day, accounting for roughly 4% of global supply, making it a key player in the global oil market.

Saul Kavonic, an energy analyst at MST Marquee, raised the possibility that Kharg Island, responsible for 90% of Iran’s crude exports, could become a target for Israeli strikes. This would significantly impact Iran’s ability to export oil, adding further pressure to the global market.

Another major concern is the Strait of Hormuz, a crucial channel through which nearly 20% of the world’s daily oil production flows. Any conflict that disrupts transit through this region could lead to even more dramatic spikes in oil prices.

Fitch Solutions issued a note stating that in the event of a full-scale war, Brent crude could rise above $100 per barrel, and any closure of the Strait of Hormuz could push prices to $150 per barrel or higher. While the probability of a full-scale war is seen as relatively low, the risk of miscalculation or escalation is now elevated.

Although some analysts believe that OPEC+ has enough spare capacity to cover any shortfall in Iranian oil, most of this capacity is concentrated in the Middle East, which could itself be drawn into a broader conflict if tensions worsen.

 

Starlink to Revolutionize In-Flight Wi-Fi, Says Air New Zealand CEO

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Air New Zealand’s CEO, Greg Foran, announced that the days of spotty or non-existent in-flight Wi-Fi are coming to an end. Speaking “Squawk Box Asia,” Foran emphasized that reliable and fast Wi-Fi will soon become ubiquitous on full-service airlines. As airlines strive to meet passenger demands for seamless connectivity, SpaceX’s Starlink satellite internet service has emerged as the latest must-have technology for aircraft.

Air New Zealand first revealed in December 2023 that it would begin equipping its aircraft with Starlink services, known for providing high-speed internet via a constellation of 6,000 satellites. The service promises passengers access to fast and reliable internet, allowing them to stream videos, browse the web, and send instant messages on multiple devices throughout their flight.

However, passengers eager for these services will need to wait a little longer. Foran explained that Starlink’s rollout on Air New Zealand planes, initially slated for late 2024, has been delayed to 2025. “Early next year, you will see Starlink operating on one of our turboprops and one of our jets,” Foran said, adding that while tests have been conducted, the next step is full operational deployment.

United Airlines has also joined the Starlink revolution, announcing on September 13 the largest agreement in the airline industry for Starlink services. Testing will begin in 2025, with the eventual goal of installing the service across its fleet of over 1,000 planes. Once implemented, Starlink will enable passengers to access high-speed internet in previously unreachable areas, such as mid-ocean and polar regions.

Both Air New Zealand and United Airlines have indicated that Starlink services will be offered free to passengers or bundled into ticket prices, eliminating the need for additional in-flight purchases for internet access. This move addresses a long-standing frustration for travelers who are often dissatisfied with the quality and pricing of current in-flight Wi-Fi options.

Foran, who met with Starlink and SpaceX representatives shortly before speaking with CNBC, highlighted the strong progress made in bringing the service to Air New Zealand. “We’re well down this path, and I think it’s going to be a fantastic offering,” he said.

Several other airlines have already embraced Starlink as their go-to in-flight internet provider. Hawaiian Airlines and smaller carriers like JSX have inked deals with the satellite service. Most recently, in late September, Air France announced plans to roll out Starlink services across its entire fleet, beginning in the summer of 2025, marking what the French airline described as “a major step in its move upmarket.”

With its increasing influence in the aviation industry, Starlink is poised to reshape the in-flight experience, providing passengers with faster, more reliable internet on a global scale.

EU Governments Set to Vote on Chinese EV Tariffs Amid Concerns Over Retaliation

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European Union member states are preparing for a crucial vote on Friday to determine whether to impose tariffs of up to 45% on Chinese-made electric vehicles (EVs). The proposed tariffs follow a year-long anti-subsidy investigation, which concluded that Chinese EVs benefit from unfair government subsidies, distorting competition within the EU market. The vote comes amid concerns of potential retaliation from Beijing, which has already initiated its own probes into European imports.

The European Commission, which manages trade policy for the bloc, has proposed the tariffs for the next five years. However, under EU rules, the decision requires a qualified majority, meaning 15 EU countries representing 65% of the bloc’s population must support or reject the proposal. If the vote is split, the Commission can still move forward with the tariffs but may also opt to amend the proposal to gain broader support.

France, Italy, Greece, and Poland have reportedly voiced their support for the tariffs, ensuring there won’t be a blocking majority against the measures. Meanwhile, Germany, the EU’s largest economy and a major car producer, is expected to vote against the tariffs. German automakers, such as Volkswagen, have expressed strong opposition, citing the significant share of their sales that come from the Chinese market, which accounts for almost a third of their global revenue. Volkswagen has labeled the proposed tariffs as “the wrong approach.”

The stance of Spain has shifted in recent days. Previously in favor of tariffs, Spanish officials have now called for a continuation of negotiations rather than imposing immediate duties. In a letter to European Commission Vice President Valdis Dombrovskis, Spain’s economy minister suggested seeking a deal on prices and relocating battery production to the EU. Spanish Prime Minister Pedro Sanchez had also indicated a desire to reconsider the EU’s position during his visit to China.

While some EU countries remain cautious of China’s reaction, the bloc’s relationship with China has become more complex over the past five years. The EU now views China not only as a partner but also as a competitor and systemic rival. In light of China’s 3 million surplus EV production capacity — double the size of the EU market — Europe has emerged as the most viable market for Chinese exports, especially given the 100% tariffs imposed by the United States and Canada on Chinese EVs.

The Commission remains open to further negotiations with China, considering alternatives to tariffs. A possible solution could involve setting minimum import prices based on various criteria, including EV range, battery performance, and vehicle specifications. The current tariff proposal includes additional duties of 7.8% for Tesla and 35.3% for SAIC and other non-cooperating companies, on top of the EU’s standard 10% import duty for cars.

As the EU prepares for this pivotal vote, the outcome will likely have far-reaching consequences for EU-China trade relations, the European automotive market, and the broader global EV supply chain.