Goldman Sachs Issues Stark Warning on Prolonged Oil Price Surge
Goldman Sachs has issued a stark warning that oil prices could remain above the symbolic $100 per barrel threshold for the entirety of 2026, contingent on the continued closure of the Strait of Hormuz. In a detailed note released on Thursday, the investment bank emphasized that any ceasefire between Iran and the United States remains fragile, and an additional month of shutdown would make a return to lower oil prices highly improbable.
Geopolitical Tensions Fuel Supply Shock
The vital shipping lane, through which approximately one-fifth of global seaborne oil transited prior to the regional conflict, has been almost entirely closed to exports for over a month. Energy analysts have described this situation as one of the most severe supply shocks in modern history. Iran had initially agreed to reopen the Strait as part of a two-week ceasefire with Washington on Tuesday, but hours after the temporary truce was signed, Iran barred tankers from passing through, blaming Israel for violating the agreement.
Israel launched its largest strike on Lebanon since the war's onset shortly after the pact was agreed, arguing that Lebanon, home to Iranian military proxy Hezbollah, was not covered by the deal's terms. This escalation underscores the volatile nature of the region and the challenges in achieving a lasting peace.
Economic Implications of Higher Oil Prices
The closure of the Strait and Goldman's forecast are exacerbating fears that the unfolding energy crisis in the Middle East could inflict permanent damage on the global economy. In an interview earlier this week, International Monetary Fund chief Kristalina Georgieva warned that even with a sudden deescalation, all paths lead to higher oil prices and slower economic growth.
These concerns were echoed by SP Angel's David Mirzai, who told City AM that the energy supply shortage is likely to cause very real economic hardship, regardless of whether the strait is reopened permanently in the near future. The potential for sustained high oil prices poses a significant threat to economic recovery and stability worldwide.
Goldman's Base-Case Scenario and Market Reactions
Currently, Goldman's base-case outlook anticipates that flows through the shipping lane will resume in earnest this weekend, gradually rising to pre-war levels over the next month. Under this scenario, Brent crude, the international benchmark, would fall to $82 per barrel in the third quarter before declining to $80 for the final three months of 2026.
On Thursday morning, Brent's spot price was $98, having fallen more than 13 percent following news of the ceasefire agreement. Prior to the war's start on February 28, the benchmark was trading at $72 per barrel, which was already considerably higher than the $60 per barrel average for much of 2025. This volatility highlights the market's sensitivity to geopolitical developments.
Political Reactions and Future Uncertainties
In a social media post on Wednesday night, former President Donald Trump stated that opening the strait to shipping had been agreed upon a long time ago and warned that the United States would reengage militarily if Tehran did not fully comply with the agreement. This adds another layer of complexity to an already tense situation, with potential military actions looming.
Goldman strategists noted in their report that the risks to their price forecast are skewed to the upside, emphasizing that the situation remains fluid. The bank's analysis suggests that the global economy faces a precarious period, with oil prices serving as a critical barometer of geopolitical stability and economic health.
