Why oil and gold prices could keep rising

Just as energy prices seemed to be settling into a lower range, the latest missile attacks in the Middle East have escalated the prospects of a broader war in the region. At the same time, China has unleashed a barrage of stimulus to support its economy. So what does this all mean for oil prices and the commodity complex more broadly, especially gold?

I think the risks in the short term are skewed somewhat to the upside, not only because of the possibility of supply disruptions in the Middle East, but also because if you look at speculative positioning, you're in the lowest one percent of history. I'm

Alison Nathan, and this is Goldman Sachs Exchanges. Today, I'm sitting down with my colleague, Don Stroyvan, our co head of commodities research, for answers. Don, welcome back to the program. Thanks,

Alison. It's great to be on. So

Don, lots to discuss. Let's dive in to the worry that is front and center on all of our minds, the prospects of a wider war in the Middle East. Oil prices that had moved to the lowest range in 3 years jumped after Iran's recent missile attack of Israel and the prospect of retaliation, which continues to linger. What's your take on how these developments might impact the oil market from here after this, what we've already seen as a very large price move? So

the big question, of course, is whether we are going to see any actual disruptions to supply in the Middle East. I think the reason the geopolitical risk premium had been quite modest in oil prices until basically Tuesday of last week is that despite wars, both in the Middle East and also in Ukraine, with Russia, we hadn't really seen any actual physical supply disruptions. And on top of that, there's a lot of spare capacity, basically 6,000,000 barrels per day of production that is currently shut in. And so the big question investors are focused on is this escalation in the conflict in the Mi

Because that is what is being speculated right now is that there might be a retaliatory attack against oil infrastructure in Iran. Right? That's, I mean, that's what I've been hearing. Yes.

So what would

the implications of that be?