Goldman Sachs has significantly lowered its crude oil price forecasts following a preliminary agreement between the United States and Iran to reopen the Strait of Hormuz, which had been closed during regional hostilities. The investment bank reduced its fourth-quarter Brent crude oil price forecast to $80 per barrel from $90, and cut its 2027 average estimate to $75 from $80, according to a research note released on Monday. Goldman also expects West Texas Intermediate to average $75 in the fourth quarter of this year and $70 in 2027.
Analysts at Goldman said they now assume Gulf exports will normalise to pre-war levels by the end of July, compared to the end of August previously expected. The revision reflects expectations that the preliminary memorandum of understanding signed by the US and Iran will lead to the reopening of this critical maritime chokepoint. The Strait of Hormuz is a strategically vital waterway through which approximately one-fifth of the world's oil and liquefied natural gas passes.
Before its closure, the strait's blockade resulted in approximately 14 million barrels per day of output being shut in. Oil prices declined sharply following the announcement of the preliminary agreement. Brent crude futures eased to $82.94 per barrel, down 0.3%, while US West Texas Intermediate declined 0.1% to $80.66 per barrel as of 0314 GMT.
Oil had slipped nearly 5% to its lowest level since March 10 on the news of the memorandum of understanding. Goldman's outlook incorporates expectations of a somewhat firmer demand recovery in the second half of 2026 and into 2027 on improved affordability resulting from lower oil prices. The bank identified two-sided risks to the Middle East oil supply outlook.
On the upside, normalisation of oil exports from Gulf producers to pre-war levels could be achieved through a 12 million-barrel-per-day increase in Hormuz flows from current levels. Additionally, Saudi Arabia and the United Arab Emirates may boost output more aggressively in response to low OECD commercial stocks, while Iran could exceed pre-war production levels if international sanctions are eased. Conversely, downside risks include potential resumption of regional hostilities, strikes on ships that could keep exports and production at low levels for longer, and the time required to clear any potential mines in the strait.
Source: EnergyNow, reporting by Noel John and Swati Verma in Bengaluru; edited by Christopher Cushing and Jacqueline Wong.
Source: energynow.com