Hormuz shipping suspension "long-term," Goldman Sachs significantly raises Q4 oil price forecast

Goldman Sachs significantly raises its Q4 crude oil price forecast, citing expectations that the duration of the Strait of Hormuz oil flow disruption will be longer than previously assumed. This adjustment suggests that if the situation worsens further, oil prices could break the 2008 record high.

In a report released on March 11, Goldman Sachs analysts Daan Struyven and others raised their Q4 Brent crude oil price forecast from $66 per barrel to $71, while the WTI forecast was increased from $62 to $67.

Goldman Sachs pointed out that if the flow through the Strait of Hormuz remains low into late March, oil prices are expected to trend upward “until the market is confident that a prolonged disruption is unlikely.” The bank also warned that if the flow remains under pressure throughout March, daily oil prices could surpass the 2008 peak levels.

On March 12, concerns about energy supply disruptions, rising oil prices, and inflation rebounded. As of the time of writing, WTI crude oil rose 8% to $93.

Extreme Scenario: Oil Prices Could Reach $93 per Barrel

The core basis for the forecast revision is a reassessment of the duration of the Strait of Hormuz flow disruption. Goldman Sachs adjusted its baseline assumption from a 10% normal flow level lasting 10 days to a 21-day period, followed by a gradual recovery phase over 30 days.

In the report, Goldman listed price estimates under two stress scenarios. In the case of a 30-day disruption, the average price for Q4 Brent crude is expected to be $76 per barrel, and WTI at $72; if the disruption extends to 60 days, Brent would jump to $93, and WTI to $89.

Although Goldman acknowledges that oil prices face risks on both sides, its report states that the “risk balance leans upward.” In the absence of clear improvement in flow, market expectations about the duration of the disruption will be a key variable influencing short-term price movements. Goldman’s statement implies that investors should prepare for scenarios with higher energy prices.

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