Goldman Sachs said on Thursday that risks to oil prices remain skewed to the upside both in the near term and into 2027.
The bank added that the persistence of several past large supply shocks highlights the possibility that oil prices could remain above $100 per barrel.
Benchmark Brent crude surged above $119 a barrel on Thursday after Iran attacked energy facilities across the Middle East in response to Israel’s strike on its South Pars gas field, marking a sharp escalation in a war that now in its third week. The war has triggered widespread shut-ins across Gulf states.
Goldman Sachs said its base case assumes a gradual recovery in oil flows from April, with Brent easing to the $70s by the fourth quarter of 2026, but warned that risks to the long-term outlook remain elevated due to the Iran war and uncertainty over the reopening of the Strait of Hormuz.
The bank said supply could remain constrained for longer if production capacity is damaged, though output could rise if OPEC deploys spare capacity once flows resume.
Goldman said the shock linked to Hormuz would be the largest on record and analyzed the persistence of production losses across the five biggest supply disruptions of the past 50 years.
The banks base case assumes oil production normalizes within four weeks of a full reopening, but flagged meaningful downside risks to long-term supply, particularly from Iran and offshore production.
Goldman Sachs said in the short term oil prices are likely to keep rising while flows through the Strait of Hormuz remain constrained, adding that Brent could surpass its 2008 peak if disruption risks persist.
It also said any increase in perceived risks of U.S. export curbs could further widen the Brent-WTI spread.
(Reporting by Anushree Mukherjee and Anjana Anil in Bengaluru; Editing by Nick Zieminski)