Goldman Sachs raises Q2 Brent oil forecast on Strait of Hormuz disruptions

GOLDMAN Sachs has sharply increased its oil price projections for the second quarter (Q2) of 2026, citing the near-total halt of tanker flows through the strategic Strait of Hormuz as a key driver of supply risk. The U.S. investment bank now expects Brent crude to average $76 per barrel between April and June, up $10 from its previous forecast.

The bank also raised its forecast for West Texas Intermediate (WTI) crude, predicting an average price of $71 per barrel for the same period, a $9 increase from its earlier estimate. These revisions reflect mounting concerns over the depletion of global oil inventories, particularly in advanced economies, should the disruption persist.

In early Wednesday Asian trading, oil prices were already outpacing Goldman Sachs’ revised estimates. Brent traded above $81.37 per barrel on Wednesday at 2.25pm, while WTI topped $74.23 per barrel, highlighting the market’s reaction to the escalating supply uncertainty as tanker traffic through the Strait of Hormuz remains stalled.

Goldman Sachs analysts warned that if flows through the strait remain stagnant for an additional five weeks, Brent prices could surge to $100 per barrel. “Such a level would likely trigger significant demand destruction as consumers adjust to prevent inventories from falling to critically low levels,” the analysts said in a note reported by Reuters.

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The investment bank also provided a range of potential price impacts depending on the duration and severity of the disruption. Estimates suggest oil could rise by $1 to $15 per barrel. A complete one-month closure of the strait, without alternative supply offsets such as pipeline rerouting or releases from strategic reserves, could push prices up by the maximum $15 per barrel.

Goldman Sachs highlighted that Middle Eastern producers could mitigate some of the risk by using existing spare pipeline capacity, roughly 4 million barrels per day (mb/d). Even with full utilisation of these bypass routes, a one-month closure would still likely lift oil prices by around $12 per barrel.

“The International Energy Agency estimates that about 4.2 mb/d of the oil currently transported through the Strait of Hormuz can be redirected via existing pipelines, leaving approximately 16 mb/d at risk if the strait were fully closed,” Goldman Sachs noted. This underscores the strategic importance of the strait in global energy flows and the sensitivity of markets to disruptions in the region.

Oil output disruptions

On Tuesday, Iraqi oil officials disclosed that output had been curtailed at the Rumaila oil field, one of the country’s most critical production hubs. The West Qurna 2 field would also shut in about 460,000 barrels per day. The move followed heightened tensions that had effectively stalled tanker traffic through the Strait of Hormuz, a vital corridor for global crude shipments.

Officials said constrained navigation and a shortage of available tankers had pushed storage facilities at southern export terminals close to capacity. With crude inventories swelling and export channels clogged, authorities were left with little choice but to scale back upstream production to ease pressure on logistics.

In a separate development, a drone strike targeted the Port of Fujairah, the United Arab Emirates’ largest oil export terminal located outside the Strait of Hormuz. The attack, which reportedly hit storage tanks and related infrastructure, sent thick plumes of smoke into the air and amplified concerns about the vulnerability of Gulf energy assets.

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The Strait of Hormuz accounts for roughly one-fifth of global oil flows. Any sustained interruption in traffic through the narrow passage materially tightens the seaborne crude market, particularly for Middle Eastern barrels bound for Asia.

QatarEnergy announced a complete halt to its liquefied natural gas (LNG) production on Monday, effectively taking the country’s entire export capacity offline. The unprecedented shutdown followed Iranian drone strikes on key energy installations at Ras Laffan Industrial City and Mesaieed Industrial City, removing nearly a fifth of global LNG supply from circulation and intensifying volatility across international fuel markets.

“If Hormuz volumes were to remain flat for 5 additional ‌weeks, ⁠Brent prices would likely reach $100, a level associated with larger demand destruction to prevent inventories from falling to critically low levels,” Goldman Sachs said in a note.