Goldman Sachs flags upside risks to oil prices in near term and into 2027

• Brent crude jumped above $119 per barrel following Iran's retaliatory strikes on Middle East energy facilities, marking a sharp escalation in a three-week war that has triggered shut-ins across Gulf states
• Goldman's base case assumes gradual oil flow recovery from April with prices easing to the $70s by Q4 2026, but warns the Hormuz disruption could be among the largest supply shocks in 50 years
• The bank cautions that Brent could surpass its 2008 peak if disruption risks persist, with long-term supply particularly vulnerable from Iran and offshore production damage

Goldman Sachs Flags Upside Risks to Oil Prices Through 2027

Key Developments:

Goldman Sachs warned on Thursday that oil prices face upside risks in both the near term and extending into 2027, with the possibility of prices remaining above $100 per barrel due to persistent supply shocks.

Market Impact:

Benchmark Brent crude surged above $119 per barrel following Iran's retaliatory attacks across the Middle East in response to Israel's strike on its South Pars gas field. The escalating three-week conflict has triggered widespread production shut-ins across Gulf states, with flows through the critical Strait of Hormuz severely constrained.

Goldman's Outlook:

The bank's base case assumes a gradual recovery in oil flows beginning in April, with Brent easing to the $70s by Q4 2026. However, Goldman emphasized elevated long-term risks due to the Iran conflict and uncertainty surrounding the Strait of Hormuz reopening. The bank noted this could be one of the most significant supply disruptions in 50 years.

Production is expected to normalize within four weeks of a full reopening, though downside risks remain, particularly for Iranian and offshore production. If disruptions persist, Brent could surpass its 2008 peak.

Supply Dynamics:

Supply constraints could extend if production capacity suffers damage, though OPEC could deploy spare capacity once flows resume. Goldman also warned that perceived risks of U.S. export restrictions could further widen market spreads.

Context:

The analysis draws on historical data from the five largest supply disruptions over the past 50 years, highlighting how major shocks can create prolonged price impacts.