Goldman Sachs has issued a research report indicating that oil prices are likely to continue rising in the near term. This outlook is driven by the persistently low traffic levels through the Strait of Hormuz. The bank suggests that if these depressed flow levels cause the market to focus on the risk of a prolonged disruption, Brent crude futures could potentially surpass their 2008 historical peak.
The report highlights that recent attacks on energy infrastructure elevate the risk of a Iran-Israel conflict impacting long-term oil prices. An analysis of the five largest historical supply shocks reveals that production remained impacted by an average of 42% even four years later, often reflecting damage to infrastructure and subdued investment.
Iran and seven other Persian Gulf nations are projected to produce 3.5 million and 21.8 million barrels per day of crude oil in 2025, respectively. This combined output represents approximately 30% of global supply. A sustained production cut from this region would exert significant upward pressure on oil prices.
However, the Organization of the Petroleum Exporting Countries (OPEC) could potentially deploy substantial spare capacity to stabilize a tight market once the Strait of Hormuz reopens.
On the demand side, the replenishment of strategic petroleum reserves (SPR) may accelerate due to currently low inventory levels and potential increases in national SPR targets. Goldman Sachs estimates that the global SPR refill rate could accelerate from a baseline of 750,000 barrels per day to 1.9 million barrels per day. This acceleration could add an upside risk of $12 per barrel to the bank's oil price forecast for the end of 2027.
Conversely, high oil prices could accelerate improvements in fuel efficiency and fuel substitution, while also slowing economic growth, leading to a deceleration in demand.
Goldman Sachs's scenario analysis indicates that oil price risks are skewed to the upside, both in the short term and by 2027. The persistence of numerous large historical supply shocks underscores that in a risk scenario involving extended disruption and sustained significant supply losses, oil prices could remain above $100 per barrel for a prolonged period.