Goldman Sachs Raises Oil Price Expectations: If the Strait of Hormuz is Blocked Until the End of March, Oil Prices Could Surpass the 2008 Peak

This Thursday, Goldman Sachs raised its forecast for Brent crude oil and WTI crude oil prices in Q4 2026 from $66/$62 per barrel to $71/$67 per barrel, citing the current situation in the Iran conflict. They predict that the disruption of oil transportation through the Strait of Hormuz could last longer than previously estimated.

They also warned that if the blockade of the Strait of Hormuz persists until the end of March, international oil prices could surpass the peak levels seen in 2008.

The Strait Blockade Could Last Longer

Since the Iran conflict began on February 28, Brent oil prices have risen over 36%, while WTI crude oil prices have increased about 39%. On Monday, both Brent and WTI prices even briefly exceeded $119, reaching their highest levels since mid-2022.

Currently, the Strait of Hormuz is effectively close to being blocked, with many oil tankers stranded for over a week, forcing several oil producers to halt production as storage facilities near capacity.

Goldman Sachs analysts stated in their report that their baseline assumption is that oil supply through the Strait of Hormuz will be reduced to 10% of normal levels for 21 days, significantly longer than their previous estimate of 10 days. They expect that after 21 days, oil transportation through the strait may gradually recover.

Goldman Sachs also warned that if the oil supply through the Strait of Hormuz remains low until the end of March, international oil prices could exceed the 2008 peak. In July 2008, WTI crude oil prices surged to $147.25 per barrel.

IEA Will Not Release the Entire 400 Million Barrels of Reserves

Goldman Sachs incorporated the current policy responses of various countries into their model, including an estimated actual release of 254 million barrels from the global strategic petroleum reserves (SPR). These measures are expected to reduce the impact on global commercial oil inventories by nearly 50%.

On Wednesday, the International Energy Agency (IEA) agreed to release a record 400 million barrels from strategic reserves to stabilize oil prices. The United States contributed a large portion of this release—U.S. Energy Secretary announced that starting next week, 172 million barrels of strategic petroleum reserves will be released.

In Goldman Sachs’s most optimistic scenario, oil supply through the Strait of Hormuz would begin to recover from March 21. However, the firm assumes that IEA member countries will not release the full 400 million barrels of oil.

This is because Goldman Sachs believes that the daily extraction of oil from the Organization for Economic Co-operation and Development (OECD) strategic reserves should be limited to 3 million barrels, and expects that by early June, as WTI prices are forecasted to fall below $70 per barrel, the IEA will gradually reduce the scale of reserve releases.

(Source: Cailian Press)