Goldman Sachs raised its Brent and WTI crude oil price forecasts for the fourth quarter of 2026 to $71/67 per barrel from $66/62 as it sees longer disruption to oil flows in the Strait of Hormuz due to the U.S.-Israeli war on Iran.
Brent prices have gained more than 36% since the war began on February 28, while WTI has risen about 39%. Both benchmarks briefly topped $119 on Monday, their highest levels since mid-2022.
The fighting has effectively shut the Strait of Hormuz, leaving tankers stranded for more than a week and forcing producers to suspend output as storage nears capacity.
Goldman analysts in a note on Thursday said they now assume 21 days of low Strait of Hormuz (SoH) oil flows at 10% of normal levels followed by a 30-day gradual recovery, compared with their earlier expectation of a 10-day disruption.
The bank expects Brent to average $98/bbl in March and April before falling to $71 by the fourth quarter of the year while in an upside risk scenario where flows through the strait are disrupted for a month, the March and April average is expected to jump to $110 before gradually declining to $76.
Spot prices are likely to exceed their 2008 peak of $147 if flows remain depressed through March, the analysts added.
Goldman incorporated a global policy response in its models wherein 254 million barrels of actual global strategic petroleum reserve (SPR) releases and 31 million barrels of draws in Russian crude reduce the hit to global commercial oil inventories by nearly 50%.
The International Energy Agency on Wednesday agreed to release a record 400 million barrels of oil from strategic stockpiles to combat a spike in global crude prices, with the U.S. contributing the majority.
In Goldman’s base case though, where Strait of Hormuz flows start recovering from March 21 onwards, it assumes IEA member states won’t fully release the 400 million barrels available.
This is because the bank assumes a logistical limit of 3 million barrels per day on draws from the Organisation for Economic Co-operation and Development (OECD) SPR and a four-week phase-out of releases through early June when WTI prices are expected to moderate to the low $70s.
(Reporting by Ishaan Arora, Noel John in Bengaluru; Editing by Sonia Cheema and Ronojoy Mazumdar)