Goldman Sachs has lifted its forecast for oil prices, citing the severe market impact of the ongoing disruption in the Strait of Hormuz and the sharp drawdown in global supply.
According to the bank’s revised outlook, Brent crude is now expected to average 90 dollars per barrel in the fourth quarter, up from an earlier projection of 80 dollars. The bank also raised its estimates for the current quarter and the third quarter, as well as for U.S. benchmark crude, reflecting the scale of the shock now hitting the energy market.
Goldman analysts say the loss of crude production in the Gulf is creating an extraordinary pressure on inventories. Their assessment points to a disruption of 14.5 million barrels per day in Gulf oil output, with global stockpiles shrinking at a pace of 11 to 12 million barrels per day in April. In their view, this kind of inventory decline is not sustainable and, if the supply shock persists, it could eventually force a deeper adjustment in demand.
The oil market has been shaken by the war involving Iran, while the parallel blockade around the Strait of Hormuz has severely restricted movement through one of the world’s most important energy corridors. Output across the region has been hit, and Brent has surged by nearly 50 percent since the conflict began in late February, raising concerns over inflation and broader economic pressure worldwide.
Goldman now expects Gulf exports to return to normal only by the end of June, rather than by mid-May as previously assumed. The bank also sees a slower recovery in regional production. Analysts warned that the broader economic risks are now greater than in their earlier baseline scenario, pointing to the possibility of further price rises, unusually high commodity costs, supply shortages and the unprecedented scale of the current shock.
As a result of the disruption, Goldman expects the market to move into a deficit of 9.6 million barrels per day this quarter, a sharp reversal from the surplus recorded a year earlier.
Morgan Stanley, meanwhile, has also pointed to the scale of the disruption, saying oil exports from the Gulf have been cut by 14.2 million barrels per day because of the closure of Hormuz. The bank said weaker demand has partly offset the loss, but global inventories are still falling by roughly 4.8 million barrels per day.
Even so, Morgan Stanley has not changed its price outlook, continuing to project an average Brent price of 110 dollars per barrel in the current quarter, 100 dollars in the third quarter and 90 dollars in the fourth. Goldman’s revised forecasts are lower for the near term, with Brent seen at 100 dollars in the current quarter and 93 dollars in the third.
With futures extending gains for a sixth straight session, the market remains highly sensitive to any shift in supply conditions, geopolitical risk and the uncertain timeline for recovery in the Gulf.
