KEY POINTS
- Goldman Sachs has raised its 2026 price forecasts for Brent crude to $85 per barrel and West Texas Intermediate (WTI) to $79 per barrel.
- The revision is driven by the prolonged blockade of the Strait of Hormuz, which the bank describes as the most significant supply disruption in global oil market history.
- International Energy Agency (IEA) chief Fatih Birol warned on Monday that the current crisis is more severe than the 1970s oil shocks and the 2022 gas crisis combined.
- Analysts estimate that cumulative global crude losses could exceed 800 million barrels if the disruption continues at current intensity.
MAIN STORY
Goldman Sachs Group Inc. reported in a research note on Sunday that it had significantly increased its long-term oil price projections due to the ongoing maritime conflict in the Middle East. The bank’s analysts, led by Daan Struyven, explained that the effective closure of the Strait of Hormuz has created a structural supply deficit that will likely keep prices elevated through 2026.
The new forecast assumes that shipping flows through the vital waterway will remain at just 5% of normal levels for at least six weeks, followed by a slow, month-long recovery period.
The report further detailed that the daily loss of Middle Eastern crude production is expected to peak at 17 million barrels per day. While commercial stockpiles in Western nations remained relatively high at the start of the conflict, Goldman observed that the physical tightness is now becoming acute, particularly in Asian markets that rely heavily on Gulf exports. The bank warned that even if a diplomatic resolution is reached, the market is now pricing in a permanent “risk premium” due to the exposed vulnerability of regional energy infrastructure.
THE ISSUES
The primary concern for global markets is the unprecedented scale of the current disruption compared to historical precedents. As noted by the IEA in Canberra on Monday, the world is currently losing roughly 11 million barrels of oil per day, which is more than double the combined shortfall of the 1973 and 1979 crises. This “triple threat”—combining oil scarcity, a 140 billion cubic metre natural gas deficit, and the physical destruction of at least 40 energy facilities—has created a volatility loop that traditional policy tools are struggling to contain. Furthermore, Goldman’s analysts pointed out that the high concentration of spare capacity in the Middle East means there is no immediate global alternative to fill a hole of this magnitude.
WHAT’S NEXT
- Investors are waiting to see if President Trump’s five-day postponement leads to a reopening of the Strait or a subsequent strike on Iranian power plants.
- The IEA is in active consultation with member states regarding a potential second coordinated release of strategic oil reserves.
- Global shipping firms are monitoring for any signs of a “safe-passage” agreement that would allow non-aligned tankers to resume transit.
- Policy makers in Asia, particularly China and India, are expected to announce new emergency energy conservation measures this week.
WHAT’S BEING SAID
- “The largest oil supply shock ever will likely lead markets to recognize the structural risks from the high concentration of production,” stated Goldman Sachs.
- “This crisis is now two oil crises and one gas crash put all together,” warned IEA Executive Director Fatih Birol.
- “Commercial crude stockpiles in OECD countries are still rising, but physical tightness in Asia is becoming apparent,” the Goldman analysts added.
BOTTOM LINE
The Bottom Line is that Wall Street is no longer treating this as a temporary “blip.” By hiking 2026 forecasts, Goldman Sachs is signaling that the Iran war has permanently altered the global energy map, forcing the world to accept a “higher-for-longer” price environment even after the missiles stop flying.
