Goldman Sachs Raises Oil Price Forecasts Amid Strait of Hormuz Disruption

Goldman Sachs Raises Oil Price Forecasts Amid Strait of Hormuz Disruption​

Analysts at Goldman Sachs have significantly increased their oil price forecasts for 2026, citing substantial disruptions to shipments through the Strait of Hormuz. The investment bank anticipates a major supply shock to global crude markets.

Revised Price Projections​

Goldman Sachs now expects Brent crude futures to average $85 per barrel in 2026, a 10.38 per cent increase from a previous estimate of $77. US West Texas Intermediate (WTI) is projected at $79 per barrel, up 9.72 per cent from the earlier forecast of $72, according to analyst Daan Struyven.

Strait of Hormuz Capacity Reduction​

The upward revision is based on the assumption that oil flows through the Strait of Hormuz will operate at only 5 per cent of normal capacity for six weeks, followed by a gradual return to normal operations over the subsequent month.

Market Volatility and Geopolitical Tensions​

Oil markets are experiencing volatility due to the ongoing conflict involving the US, Israel, and Iran, now in its fourth week. President Donald Trump issued a two-day ultimatum to Tehran regarding the critical shipping route, prompting warnings of retaliation.

Goldman Sachs stated that this disruption could lead policymakers and investors to reassess vulnerabilities in global energy supply, particularly the concentration of production and spare capacity in the Middle East.

Inventory Levels and Potential Output Losses​

Despite tightening supply conditions in Asia, crude inventories in OECD economies across the US and Europe are currently building. This reflects the fact that global supply had been exceeding demand prior to the conflict.

The bank estimates that crude output losses in the Middle East could increase from 11 million barrels per day to a peak of 17 million barrels per day. Assuming a full recovery over four weeks after normal operations resume, total cumulative losses are expected to exceed 800 million barrels.

Recent Market Performance​

Brent crude futures rose as much as 0.73 per cent to an intraday high of $113.01 per barrel as of 10:18 am, while crude US WTI was at $101.50, up 3.32 per cent from the previous close.