Goldman warns oil may stay above $100

The investment bank said benchmark Brent prices are expected to average above the $100 mark during March before easing to around $85 a barrel in April, assuming supply flows begin to stabilise. The forecast revision follows rising tensions in the Middle East and severe disruption to maritime traffic through the Strait of Hormuz, one of the world’s most important oil transit routes.

Energy markets have swung sharply as tanker traffic through the narrow channel — which normally carries roughly a fifth of the world’s oil supply — has been curtailed amid conflict and security threats. Brent futures briefly climbed above $100 a barrel in early March and at one point traded near $119, marking the highest levels since mid-2022. Traders have been pricing in the risk that shipping disruptions could last weeks or even months.

Analysts at Goldman Sachs say their revised projections reflect a tightening supply picture driven by damage to energy infrastructure, attacks on commercial shipping and logistical constraints affecting exports from the Gulf. Should the disruption to Hormuz shipping continue for an extended period, the bank warned that price spikes above $100 could persist well beyond the current quarter.

Brent crude is widely regarded as the global benchmark for oil pricing, and its movement has broad implications for inflation, energy costs and industrial production worldwide. A sustained rise above $100 a barrel tends to push up fuel prices, increase transportation costs and place additional pressure on economies that depend heavily on imported energy.

Much of the volatility stems from geopolitical tensions centred on the Persian Gulf, where oil and liquefied natural gas shipments pass through the narrow Strait of Hormuz linking the Gulf to the Arabian Sea. Estimates from energy authorities suggest between 18 and 20 million barrels of oil per day normally transit the waterway, accounting for roughly one fifth of global consumption.

Security threats and military activity have sharply reduced tanker traffic through the strait, leaving many vessels anchored offshore or rerouted to avoid the high-risk zone. Shipping companies and insurers have raised premiums for voyages through the area, further complicating logistics for exporters and refiners.

Global markets have been scrambling to respond to the disruption. Member states of the International Energy Agency approved the coordinated release of hundreds of millions of barrels from emergency reserves in an attempt to calm markets and offset supply losses. Governments have also explored measures to stabilise fuel costs, while traders have increased purchases of alternative crude grades from regions such as the United States, Brazil and West Africa.

Even with these interventions, analysts caution that strategic reserves can only provide temporary relief if shipping lanes remain constrained. Emergency stockpiles are designed to address short-term disruptions rather than sustained geopolitical crises affecting core supply routes.

The impact of the oil rally has already begun to ripple through financial markets. Higher crude prices have supported shares of energy producers and exploration companies, while airlines, shipping operators and chemical manufacturers have faced mounting cost pressures. Central banks and policymakers are also watching the energy shock closely because persistent price increases could feed into broader inflation.

Energy economists note that the current disruption differs from previous market shocks because it affects both production and transport simultaneously. While many Gulf producers retain substantial capacity, the ability to move crude to international markets has been restricted by security concerns and maritime bottlenecks.

Goldman Sachs expects oil prices to moderate later in the year if shipping flows resume and infrastructure damage proves limited. The bank forecasts Brent crude could settle in the low $70 range by the end of the year under a scenario where geopolitical tensions ease and production levels normalise.

However, the outlook contains significant uncertainty. Analysts said a prolonged shutdown of Hormuz traffic lasting several months could dramatically alter supply balances and push prices higher for longer. In that scenario, the bank estimated Brent could average around $93 per barrel during the final quarter of the year, well above earlier projections.

Other energy analysts have echoed warnings that the crisis could evolve into one of the largest supply disruptions in decades if multiple Gulf exporters remain constrained simultaneously. Markets are particularly sensitive to developments affecting Saudi Arabia, Iraq, Kuwait and the United Arab Emirates, whose exports rely heavily on the Hormuz route.

Asian economies would likely face the greatest exposure to prolonged disruptions because they import the bulk of Gulf crude shipments. Major importers such as China, Japan, South Korea and India depend on the region for a substantial share of their energy needs, leaving them vulnerable to sudden price swings and supply shortages.