Goldman Sachs Raises Oil Price Forecasts and Warns Oil May Break All-Time Highs if Strait of Hormuz Disruption Persists

TradingKey - As tensions in the Middle East continue to escalate, concerns over supply disruptions in the energy market are heating up rapidly. Goldman Sachs' latest report raised its crude oil price forecasts and warned that if oil shipments through the Strait of Hormuz are blocked for a prolonged period, international oil prices could approach or even exceed the historical peaks of 2008.

Goldman Sachs Raises Oil Price Forecasts

In its latest report, Goldman Sachs raised its oil price forecasts for the fourth quarter of 2026. Specifically, the expected price for Brent crude (BOIL) was revised upward from $66 to $71 per barrel, while the forecast for West Texas Intermediate (WTI) was raised from $62 to $67 per barrel.

The firm noted that the upward revision primarily stems from a reassessment of the duration of transport disruptions in the Strait of Hormuz. Based on its assessment of the latest developments, Goldman Sachs now expects that oil supply through the strait could drop to approximately 10% of normal levels and persist for about 21 days, compared to its previous expectation of only 10 days.

This critical waterway accounts for about 20% of global oil shipments. If blocked for an extended period, the global crude oil supply chain will face a significant shock.

Since the outbreak of the conflict in late February, oil prices have risen significantly. Brent crude has gained more than 36% cumulatively, while WTI has risen by approximately 39%. Earlier this week, both benchmarks briefly broke above $119, hitting their highest levels since 2022.

Goldman Sachs further pointed out that if disruptions in the Strait of Hormuz persist until the end of March, the global crude market could enter a state of severe supply tightness. Under such circumstances, international oil prices have the potential to break through historical highs.

In July 2008, WTI crude hit a historical peak of $147.25 per barrel on the eve of the financial crisis. Goldman Sachs believes that in an extreme supply shock scenario, oil prices could theoretically approach this level again.

The current rise in oil prices primarily reflects a rapid expansion of the supply risk premium rather than changes on the demand side. Should transport bottlenecks persist, the rapid decline in global commercial inventories will further drive prices higher.

Meanwhile, due to rising security risks, some tankers have suspended entry into the Strait of Hormuz, and shipping insurance costs have risen significantly, further amplifying market concerns over supply disruptions.

Strategic Reserve Releases May Buffer Part of the Shock

As supply risks rise, governments are also discussing the deployment of strategic petroleum reserves (SPR) to stabilize the market. According to Goldman Sachs' model assumptions, the actual release from global strategic reserves could be approximately 254 million barrels, which would reduce the impact on commercial inventories by about half.

This week, the International Energy Agency (IEA) agreed to release a record 400 million barrels of crude oil from its member states' strategic reserves to alleviate market supply pressures. Of this total, the U.S. plans to contribute approximately 172 million barrels.

However, Goldman Sachs believes that IEA member states may ultimately not release the full amount of reserves. The report expects that the release rate from strategic reserves of OECD (Organisation for Economic Co-operation and Development) countries may be capped at about 3 million barrels per day to avoid excessive inventory depletion.

In Goldman Sachs' base-case scenario, shipment volumes through the Strait of Hormuz could gradually recover after March 21, and the scale of strategic reserve releases would also taper off as oil prices decline. The firm expects that if supply recovery proceeds smoothly, WTI prices could fall back below $70 per barrel by early June.

Multiple Wall Street institutions have noted that as long as uncertainty remains regarding shipments through the Strait of Hormuz, oil price volatility is likely to remain at elevated levels. For the market, key variables over the coming weeks include the speed of shipping recovery, the scale of strategic reserve releases, and whether the situation in the Middle East escalates further.

Until these factors become clearer, the energy market is likely to remain highly volatile, and crude oil prices will continue to be dominated by geopolitical risks.