Goldman sees Brent topping $115–$120 in severe Hormuz scenario

Oil prices are likely to remain elevated for the foreseeable future as the Strait of Hormuz is unlikely to fully reopen any time soon. 

Goldman Sachs forecasts that the price of Brent crude oil will average over $100 per barrel through 2026, assuming the Strait of Hormuz closure lasts for an additional month.

Goldman Sachs analysts, including Daan Struyven, said "the situation remains fluid" in a note.

They made this comment after the start of a two-week ceasefire between the US and Iran, pointing out that Vice President JD Vance described the truce as fragile.

“We continue to see the risks to our price forecast as skewed to the upside,” the analysts said in the note. 

Despite suffering their steepest daily fall since April 2020, oil prices recovered on Thursday. ICE Brent, for instance, climbed over 3% to trade above $98 per barrel once more. 

Different scenarios

This rebound was driven by continued conflict in the Middle East and a worsening outlook for a ceasefire, which intensified focus on the persistent uncertainty surrounding the Strait of Hormuz.

Goldman Sachs' current base-case projection anticipates a recovery in oil flows through the strait, beginning this weekend. 

Following this, the bank forecasts a month-long, gradual return of Persian Gulf exports to their pre-war levels.

This scenario suggests Brent crude will average $82 per barrel in the third quarter, dropping slightly to $80 in the fourth quarter.

Analysts projected that, under the bank's "adverse view" scenario—which included a one-month delay in the economic reopening—Brent crude oil prices were anticipated to average more than $100 per barrel in the latter half of the year.

A more pessimistic scenario by Goldman Sachs, driven by a prolonged shutdown and reduced regional output, resulted in even higher projections: Brent crude was anticipated to hit $120 per barrel in the third quarter and $115 in the fourth.

“The market still needs to watch for signs of a repricing of the longer-duration scenarios,” analysts at Rystad Energy said in an emailed commentary. 

As the ceasefire proposal details are digested and understood, the main triggers would be only Iranian-friendly ships allowed to transit, weaker exporter loading reliability, or evidence that insurers and shipowners still view Gulf transit as unsafe.

Impact on oil markets

Futures markets would experience the most immediate and intense reaction during an escalation scenario, as they are where the forces of fear, optionality, and probability are priced, according to Rystad’s analysts.

Hope for the ceasefire diminished after Tehran claimed that several conditions of the agreement had been violated.

Simultaneously, Israel initiated its largest assault on Lebanon since the invasion began.

Furthermore, US President Donald Trump declared that the US military would "remain in place in, and around Iran, until such time as the real agreement reached is fully complied with." 

An Iranian delegation is scheduled to arrive in Islamabad on Thursday night.

With a full reopening of the strait unlikely in the near term, oil prices are expected to remain supported, as disruptions linked to reduced output and refinery shutdowns will take time to unwind.