Goldman raises 2026 oil forecasts on Iran conflict risk
Bank lifts Brent and WTI targets as Strait of Hormuz disruptions embed $14-18 risk premium in prices
Goldman Sachs has raised its 2026 oil price forecasts by $9-$10 per barrel, citing ongoing disruptions in the Strait of Hormuz and a significant geopolitical risk premium embedded in crude prices as tensions between Iran and Israel persist.
The bank increased its second-quarter 2026 Brent crude forecast to $76 per barrel, a $10 upward revision, while lifting its West Texas Intermediate projection to $71 per barrel, up $9. For the fourth quarter of 2026, Goldman now sees Brent averaging $66 per barrel and WTI at $62, according to analyst forecasts reported by Reuters.
The revisions come as traders have priced in a $14-$18 per barrel risk premium due to the Iran conflict, which threatens shipments through the Strait of Hormuz. Approximately one-fifth of global oil and liquefied natural gas supply flows through the strategic waterway, according to Goldman Sachs Research.
"Reduced flows through the Strait of Hormuz have contributed to an 8% increase in oil prices since Friday and a 25% year-to-date rise," Goldman analysts noted. Brent crude, the international benchmark, closed at $77 on Monday, March 3, up from $72 the previous Friday and $61 at the end of last year.
The bank outlined several scenarios for potential price increases depending on the duration and severity of any Strait of Hormuz closure. A complete one-month halt without offsets could push prices $15 higher, while utilization of spare pipeline capacity could limit the increase to $12. With both strategic petroleum reserves and pipeline capacity deployed, the impact would be around $10 per barrel, Goldman's analysis shows.
Even partial disruptions would drive prices higher, with a 50% one-month closure potentially adding $4 per barrel. Goldman warned that sustained closures could push Brent into triple-digit territory.
The energy sector has surged on the geopolitical tensions. The Energy Select Sector SPDR Fund (XLE) gained 14% over the past 30 days and nearly 30% over the past 12 months, according to market data. WTI crude futures are trading around $77 per barrel, marking a 27% year-to-date gain from $60 at the start of January.
Goldman's revised forecasts assume continued low oil flows through the Strait of Hormuz, which would lead to "significant declines in OECD inventories and Middle East oil production," Dow Jones Newswires reported.
Historically, oil price spikes from geopolitical shocks have proven temporary, though Goldman noted that prices can rise significantly when uncertainty is high and concerns about persistent supply disruptions exist. The bank's base case assumes no sustained supply disruptions, with Brent projected at $60 per barrel by the fourth quarter of 2026 in a scenario without geopolitical tensions.