Goldman Sachs has increased its price projections for Brent and WTI crude oil in the fourth quarter of 2026 to $71/67 per barrel, up from $66/62. The adjustment is influenced by the prolonged disruption in oil supply through the Strait of Hormuz due to ongoing conflict involving the US and Israel against Iran.
Since the conflict commenced on February 28, Brent prices have surged by over 36%, and WTI prices have climbed approximately 39%. Both benchmarks briefly surpassed $119 on Monday, marking their highest levels since mid-2022.
The conflict has effectively closed the Strait of Hormuz, resulting in tankers being stranded for more than a week and necessitating producers to halt output as storage facilities approach full capacity.
Goldman analysts, in a recent statement, indicated a revised expectation of 21 days of significantly reduced oil flows through the Strait of Hormuz, amounting to 10% of normal levels, followed by a 30-day gradual recovery period. This contrasts with their previous forecast of a 10-day disruption.
The financial institution anticipates that daily oil prices could surpass the peak witnessed in 2008 if the flow through the Strait of Hormuz remains constrained until March.
Goldman’s models now account for a substantial policy response, incorporating the release of 254 million barrels from the global strategic petroleum reserve (SPR) and a 31 million barrel decrease in Russian crude, which collectively would mitigate the impact on global commercial oil inventories by almost 50%.
To address the surge in global crude prices resulting from the conflict, the International Energy Agency (IEA) has agreed to release a historic 400 million barrels of oil from strategic reserves, with the US contributing the majority of the supply.
In Goldman’s scenario where the flow through the Strait of Hormuz begins to normalize from March 21 onwards, they predict that IEA member states may not fully utilize the available 400 million barrels due to logistical constraints. The assumption includes a daily draw limit of 3 million barrels from the Organisation for Economic Co-operation and Development (OECD) strategic petroleum reserve and a phased reduction in releases until early June, when WTI prices are expected to stabilize in the low $70 range.