The spread between Goldman’s base case and its upside scenario underscores how sensitive crude markets remain to Gulf shipping risk. A sustained Hormuz disruption would tighten physical supply sharply, given the strait’s role in global flows, while thin inventories leave little buffer to absorb a shock. Traders are likely to keep pricing in a geopolitical premium as long as ceasefire talks remain unresolved, with diesel tightness and Red Sea threats adding further upside pressure. Conversely, any confirmed de-escalation between the US and Iran could quickly unwind recent gains toward Goldman’s $80 base case.
I had the instant news on this yesterday:
Getting some time to add further now.
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Goldman says oil’s fate now hinges on whether Hormuz stays open or the Gulf tips back toward war.
Summary:
- Goldman Sachs said Brent could climb back toward $120 a barrel by Q4 2026 if Strait of Hormuz disruptions continue, according to the bank’s note.
- Persian Gulf oil flows have dropped below 45% of pre-war levels, per Goldman’s analysis.
- Goldman’s base case still points to Brent at $80/bbl in Q4 2026 and $75/bbl in 2027, according to the bank.
- Brent could average $100/bbl through 2027 if Hormuz remains disrupted, Goldman said.
- Brent topped $90/bbl on July 19 before easing to $88.47 by July 21 on ceasefire hopes, per market pricing cited in the note.
- Goldman cited tight diesel markets, Ukrainian strikes on Russian refineries, and elevated gas price risk as additional factors behind the skew toward higher prices.
Goldman Sachs said Brent crude could climb back toward 120 dollars a barrel by the fourth quarter of 2026, approaching the 126.41 dollar intraday peak the benchmark hit on April 30 during the US Iran war, should disruptions to flows through the Strait of Hormuz continue.
The bank’s commodities analysts said escalation in the Middle East, combined with a drop in Persian Gulf oil flows to below 45 percent of pre war levels, has pushed prices sharply higher this month. Brent topped 90 dollars a barrel on July 19 as the conflict intensified, before easing to 88.47 dollars by July 21 on ceasefire hopes.
Despite the upside scenario, Goldman’s own base case forecast remains unchanged: Brent at 80 dollars a barrel in the fourth quarter of 2026 and 75 dollars next year, premised on a de escalation between the United States and Iran. If Hormuz disruptions persist through 2027, however, the bank sees Brent averaging as high as 100 dollars a barrel for the year.
The analysts said risks skew firmly toward higher prices given the possibility of a wider blockade around Hormuz, as well as potential disruption in the Red Sea, where Houthi rebels have threatened to blockade Saudi shipments. Lower global inventories have left the market more exposed to supply shocks, though a slump in Chinese crude imports and greater demand elasticity could help cap further gains, the note said.
Goldman also pointed to tight diesel markets, continued Ukrainian strikes on Russian refineries, and elevated odds of a wider natural gas price spike tied to the conflict as additional factors reinforcing the skew toward higher prices. Taken together, the bank’s analysis frames the oil market as sitting on a knife edge: a de escalation path that keeps Brent anchored near 80 dollars, against an escalation path that could send prices back toward levels not seen since the acute phase of the US Iran war earlier this year.
For now, traders are left weighing a wide band of outcomes, with the direction of diplomacy around Iran and the Gulf shipping lanes likely to remain the single biggest swing factor for oil prices through the rest of 2026.
This article was written by Eamonn Sheridan at investinglive.com.