Goldman Sachs has outlined two sharply different scenarios for global oil prices, with the outlook hinging on whether tensions surrounding the Strait of Hormuz ease or escalate. While the bank’s base case sees Brent crude averaging around $80 per barrel later this year, a prolonged disruption to Gulf exports could send prices above $120.
The investment bank expects Brent crude to average around $80 per barrel in the fourth quarter of 2026 before easing to approximately $75 per barrel in 2027, provided geopolitical tensions between the United States and Iran begin to de-escalate.
The forecast assumes that diplomatic efforts eventually reduce hostilities and allow oil exports through the Gulf to normalize. Recent reports suggesting renewed mediation efforts and proposals for a temporary ceasefire have supported hopes that a broader regional conflict can still be avoided.
A High-Risk Alternative Scenario
Despite its relatively stable base case, Goldman Sachs warns that risks to oil prices remain heavily skewed to the upside.
According to the bank, crude exports through the Strait of Hormuz have fallen significantly since the latest escalation in fighting, with Gulf oil flows estimated to be around 45% below pre-conflict levels.
Should those disruptions continue, Brent crude could climb above $120 per barrel by the fourth quarter, reflecting both physical supply shortages and a sharp increase in geopolitical risk premiums.
In this scenario, Goldman Sachs expects oil prices to remain elevated throughout 2027, with Brent averaging around $100 per barrel if Gulf production and export capacity fail to recover until additional bypass pipeline infrastructure becomes operational.
Why Hormuz Remains Critical
The Strait of Hormuz is one of the world’s most important energy corridors, carrying a substantial share of global seaborne crude oil and liquefied natural gas exports.
Any prolonged disruption forces traders to reassess global supply security, increases tanker insurance costs, raises freight rates, and limits the availability of crude from key producers including Saudi Arabia, Iraq, Kuwait, the United Arab Emirates and Qatar.
Even when production remains largely intact, restrictions on exports can tighten global markets by reducing the volume of oil reaching international buyers.
Implications for Energy Companies
Higher oil prices would significantly improve cash flows for many energy producers.
Under Goldman Sachs’ upside scenario, oil companies could generate stronger earnings, accelerate debt reduction, increase dividend payments and expand share buyback programmes.
However, even the bank’s base-case forecast of $75–80 Brent represents a healthy price environment for many international producers, allowing continued investment while maintaining shareholder returns.
Outlook
The gap between Goldman Sachs’ two scenarios highlights how closely oil markets are tied to geopolitical developments rather than supply-demand fundamentals alone.
For now, investors are watching two competing forces: diplomatic efforts aimed at reducing regional tensions and the ongoing disruption to one of the world’s most strategically important shipping lanes.
Whether Brent stabilises near $80 or advances beyond $120 will largely depend on how events unfold in and around the Strait of Hormuz over the coming months.
