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The risk of crude oil supply disruption in the Middle East has dropped to just 4%, according to options traders, Goldman Sachs said in a new note, after Israel and Iran agreed to a ceasefire earlier in the week.

The bank’s analysts reported that options traders now see a 60% chance for Brent crude to average between $60 and $70 over the next three months, with the chance of the benchmark topping $70 per barrel at 28%, Reuters wrote.

Among the factors driving these expectations, Goldman listed the absence of any disruption during the latest military action in the Middle East, motivation in the U.S. and China to not let oil go much higher, and the prospect of a build in global oil inventories later in the year.

Earlier in the week, Goldman Sachs warned that Brent could surge above $100 per barrel in case Iran blocks the Strait of Hormuz. The investment bank said this price could materialize if oil flows via the vital chokepoint were cut by half for a month and remained 10% lower than normal over the next 11 months.

After the initial price shock under Goldman’s scenario, Brent would moderate to $95 per barrel over the final quarter of this year, the bank’s analysts also said on Monday. This was a substantial revision of an earlier forecast for oil prices made by the bank last week. Then, Goldman Sachs estimated a geopolitical premium of approximately $10 per barrel on Brent crude, though it suggested oil could exceed $90 if Iranian supply were disrupted.

Now that the risk of such a severe disruption is largely gone, forecasts are once again being revised in a hurry. ING analysts said in a note today that they expected OPEC+ to agree the addition of another 411,000 bpd to combined output at its next meeting on July 6, boosting global supply.

By Irina Slav for Oilprice.com