Goldman boosts oil predictions after biggest Iran war supply shock
Goldman Sachs Group Inc. has elevated its oil price forecasts for 2026, attributing this adjustment to the extended disruption of flows through the Strait of Hormuz, which it characterized as the largest supply shock ever experienced in the global crude market. Brent is projected to average $85 a barrel in 2026, an increase from the previous estimate of $77, according to analysts including Daan Struyven in a note. The full-year outlook for West Texas Intermediate was raised to $79 from $72, they stated. The revisions were based, in part, on the assumption that traffic through Hormuz would stay at merely 5 percent of normal levels for a duration of six weeks, followed by a recovery period of one month, according to the note dated March 22. The bank estimated that, over time, this could lead to cumulative losses exceeding 800 million barrels.
Energy markets are experiencing significant upheaval due to the ongoing US-Israeli conflict with Iran, which has now persisted for four weeks without any indication of a resolution. President Donald Trump issued a two-day ultimatum to Iran, demanding the reopening of Hormuz — the vital passage linking the Persian Gulf to global markets — or face the bombing of its power plants. Tehran issued a warning of potential reprisals.
Reflecting Goldman Sachs’ assessment of the gravity of the situation facing global energy markets, International Energy Agency Executive Director Fatih Birol stated at a media event in Canberra, Australia, on Monday that the impact of the ongoing disruptions was comparable to “the two major oil crises in the 1970s, and the 2022 natural gas crisis after Russia invaded Ukraine, all put together.” An analysts wrote “The largest oil supply shock ever will likely lead policymakers and markets to recognize the structural risks from the high concentration of production and spare capacity in the West Asia and from the vulnerability of energy infrastructure.”
According to analysts, crude-production losses in West Asia are projected to increase from the current 11 million barrels a day to a peak of 17 million barrels a day, assuming a gradual recovery over four weeks following a complete reopening of Hormuz. Currently, the shock is causing tightness in Asia, while commercial crude stockpiles in American and European OECD countries continue to rise, as global supply outstripped demand prior to the war, they noted.
