CRUDE oil prices are set to close the week with gains of more than 21 percent, even after a slight pullback on Thursday triggered by signals from the United States about possible intervention in the futures market to cool rising prices.
At the time of reporting, Brent crude traded at $88.93 per barrel, while West Texas Intermediate stood at $87.64. The dip followed an announcement from the U.S. Treasury Department that it would grant temporary sanctions waivers to commodity trading firms, allowing them to sell Russian crude currently stranded on tankers. The move comes as oil supplies from the Middle East tighten due to major disruptions to tanker traffic in the Strait of Hormuz.
According to media reports, the cargoes, which are estimated at about 9.5 million barrels, are expected to be sold to India. Bloomberg reported that the sanction waivers would last for a period of 30 days.
Senior Analyst at Phillip Nova, Mr Priyanka Sachdeva, told Reuters that the continued halt of shipping activities in the Strait of Hormuz could have major consequences for the global oil market. She noted that the situation could prevent the storage of up to 20 million barrels of crude per day while also restricting supply to international markets, potentially pushing global energy prices even higher.
Earlier reports also indicated that several Middle Eastern producers may soon be forced to scale back output due to limited storage capacity. Iraq has already begun cutting production by roughly 1.5 million barrels per day, while Kuwait could follow if shipping through the Strait of Hormuz does not resume within the next two weeks.
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Commodity analysts at ING said the U.S. decision to issue sanction waivers may temporarily ease pressure on prices but would not significantly change market dynamics. They noted that a sustained drop in oil prices would depend largely on the restoration of normal oil flows through the Strait of Hormuz, something that currently appears unlikely in the near term.
Goldman Sachs’ projection
Goldman Sachs has already 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.
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.
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.
