Goldman Sachs Again Raises Oil Price Forecast: Strait of Hormuz Supply Disruption Forcing Oil Market Reassessment

Question: How does the supply disruption at the Strait of Hormuz expose the structural risks of Middle Eastern oil production capacity?

Goldman Sachs has again raised its oil price forecast in less than two weeks, assuming that the Strait of Hormuz will operate at only 5% of normal capacity over the next six weeks. The bank warns that this historic largest oil supply shock will reveal the structural risks associated with concentrated Middle Eastern production capacity.

In less than two weeks, Goldman Sachs has revised its oil price outlook upward again, responding to ongoing shipping disruptions at the Strait of Hormuz and increasing structural vulnerabilities in global oil supply. The latest forecast reflects both immediate supply challenges and longer-term issues related to inventories and capacity.

According to a report released on March 22 by Goldman Sachs analyst Daan Struyven, the upward revision is based on the assumption that: Over the next six weeks, crude oil shipments through the Strait of Hormuz will remain at only 5% of normal levels, followed by a one-month gradual recovery period. This longer-than-expected disruption, combined with limited alternatives from spare capacity, is expected to significantly alter short-term market pricing and supply-demand dynamics.

As a result, Goldman Sachs has raised its Brent crude oil price forecast for March and April to $110 per barrel, up sharply from the previous forecast of $98, and significantly above its 2025 outlook.

Beyond the short-term disruption, Goldman emphasizes long-term structural changes in the oil market. The bank points out that the high concentration of global production and idle capacity—primarily in a few countries—may lead to more persistent risk premiums in oil prices. Analysts suggest this dynamic is likely to encourage governments and market participants to increase strategic reserves, thereby exerting upward pressure on long-term crude prices.

Goldman Sachs analysts wrote: “The largest-ever oil supply shock may make policymakers and markets realize the structural risks posed by highly concentrated Middle Eastern production and idle capacity, as well as fragile energy infrastructure.”

Considering these developments, they project the average Brent crude price in 2026 to be $85 per barrel, up from the previous estimate of $77; and they have raised the full-year WTI crude oil price forecast from $72 to $79 per barrel.

For Q4 2026, Goldman Sachs also raised its forecasts for Brent and WTI crude to $71 and $67 per barrel, respectively, from previous estimates of $66 and $62. Looking beyond 2026, the bank expects the 2027 average Brent price to reach $80 but emphasizes that prices could rise sharply. Goldman Sachs notes that if the Strait of Hormuz supply disruption persists, Brent crude could surpass the record highs set in 2008.

The ongoing conflict between Israel, the US, and Iran has unsettled energy markets, with no resolution in sight after four weeks of fighting. US President Trump has issued an ultimatum to Iran, demanding the reopening of the Strait of Hormuz within two days or else face bombing of Iranian power plants; Iran has threatened retaliation.

From the physical market perspective, this disruption has already tightened supplies in Asia, but commercial crude inventories in the US and OECD countries are still rising, as global oil supply had exceeded demand before the conflict erupted.

Analysts estimate that if the Strait of Hormuz fully reopens and gradually recovers over four weeks, Middle Eastern oil production losses could peak at 17 million barrels per day, up from the current 11 million barrels, with total losses exceeding 800 million barrels.