Goldman’s framing gives traders a clear range to work with: $120 a barrel if shipping attacks broaden and intensify, $80 if Gulf exports normalize, with Brent trading near $97 as the note went out. That $23 spread either side of spot underscores how binary the near-term outlook remains, and Goldman’s own house call, a $5 lift to both Brent and WTI forecasts for December 2026 and 2027, signals the bank sees the balance of risk skewed toward the upside scenario rather than normalization.
The bank’s preference for expressing that risk through natural gas and diesel rather than crude itself is worth flagging separately, since it implies Goldman sees the biggest supply shock currently priced into product and gas markets rather than crude, a distinction that matters for how the risk shows up across the energy complex rather than just at the crude headline level.
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Earlier … escalation again:
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Goldman just put a number on how bad Hormuz could get for oil, and it’s already raising its base case to get closer to it.
Summary:
- Goldman Sachs sees oil rallying to as much as $120 a barrel if attacks on Middle East shipping intensify, with Brent last trading near $97
- The bank’s downside scenario is $80 a barrel should exports from the region normalize
- Goldman raised its Brent and WTI price forecasts by $5 to $85 and $80 respectively for December 2026, and to $80 and $75 for 2027
- Brent could exceed $120 a barrel if 2027 average Gulf output remains 4 million barrels a day below pre-war levels, according to the bank
- Goldman recommends expressing the geopolitical risk through long positions in natural gas and diesel rather than crude, citing bigger supply shocks in those markets
- Diesel prices have more than doubled this year, with China expected to continue acting as a stabilizing force in the crude market by curbing imports at elevated prices
Goldman Sachs has laid out a wide range for where oil could head depending on how the standoff over the Strait of Hormuz plays out, flagging a potential rally to $120 a barrel if attacks on Middle East shipping intensify, against a lower target of $80 should exports from the region normalize. Brent was last trading near $97 when the bank’s commodities team made the call. The bank has since lifted its own forecasts, raising both Brent and WTI by $5 to $85 and $80 respectively for December 2026, and to $80 and $75 for 2027, while flagging that Brent could climb past $120 if average Gulf output through 2027 stays roughly 4 million barrels a day below pre-war levels.
Daan Struyven, Goldman’s co-head of global commodities research, said the risk of shipping disruptions broadening and intensifying has become more significant given recent developments. Crude has climbed to its highest level since July as the US and Iran remain locked in a standoff over the strait, with Washington striking Iranian tankers, Tehran declaring a new restricted zone outside the waterway, and American naval forces continuing to blockade Iranian ports while escorting other producers’ vessels through the region.
Rather than expressing that risk through crude itself, Goldman is recommending investors hedge via long positions in natural gas and diesel, arguing the supply shocks in those markets are larger than in crude. Diesel has more than doubled in price this year, with gains across natural gas and refined products broadly outpacing crude since the conflict escalated more than six months ago.
Goldman also expects China to continue acting as a stabilizing force in the crude market specifically, reining in imports in response to elevated prices, a role Struyven said Beijing has not taken on in natural gas or refined products. That distinction leaves the product and gas markets more exposed to the upside scenario Goldman is flagging, even as crude itself benefits from at least some demand-side cushioning from China’s buying behaviour.
This article was written by Eamonn Sheridan at investinglive.com.