Despite the U.S. Navy's implementation of a blockade on Monday, April 13, aimed at preventing Iran-affiliated vessels from transiting the Strait of Hormuz, oil prices have since stabilized below $100 per barrel.
The oil futures market remained relatively calm during the first three days of the week. However, this tranquility is unlikely to persist given the tense geopolitical situation surrounding the world's most critical oil transit route.
Oil prices face the potential for two extreme trajectories: a surge to new highs or a retreat to pre-conflict levels. The outcome largely hinges on the progress of U.S.-Iran negotiations, but the most critical factor remains the navigation status of the Strait of Hormuz and how quickly regular vessel traffic can resume.
Currently, despite the U.S. blockade and claims by Central Command of significant success, transit for non-Iranian vessels has not yet resumed. Meanwhile, ship-tracking data indicates that some Iranian-flagged vessels have successfully breached the blockade.
Global physical oil supplies remain severely constrained, evidenced by refiners' willingness to pay up to $150 per barrel for certain non-Middle Eastern crudes. The price of crude for immediate delivery has surged dramatically due to supply tightness, trading approximately $40 per barrel above futures prices.
In contrast, the futures market is primarily driven by headlines and market sentiment, with current hopes pinned on the resumption of U.S.-Iran talks.
For analysts, forecasting oil prices has become exceptionally challenging. Uncertainty and conflicting signals from the U.S. administration have reduced price prediction visibility to nearly zero.
For instance, Goldman Sachs maintained its average price forecasts for Brent and WTI crude for 2026 at $83 and $78 per barrel, respectively. However, the investment bank also highlighted both upside and downside risks to its outlook.
**Upside and Downside Risks Coexist**
According to a widely cited Goldman Sachs report, the low flow of oil through the Strait of Hormuz represents the most significant upside risk. The bank's analysts estimate current transit volumes at just 10% of pre-war levels, approximately 2.1 million barrels per day. Furthermore, no liquefied natural gas (LNG) shipments have passed through the strait since the conflict began on February 28.
Daan Struyven, co-head of global commodities research at Goldman Sachs, stated on Wednesday, "A ceasefire agreement reduces the risk premium and the likelihood of prolonged, large-scale supply disruptions. However, the resumption of flows through the strait will take time, so overall, this still presents an upside risk to our oil price forecast."
Struyven noted that Goldman Sachs currently estimates supply losses at approximately 10 to 11 million barrels per day, with demand losses potentially offsetting about 3 million barrels per day. Demand destruction in Asia has been particularly significant, especially in aviation and petrochemicals. He warned that the longer this Asian demand destruction persists, the more likely it is to spread to other continents and product markets.
Goldman Sachs maintains its price forecast based on the assumption that flows through the Strait of Hormuz will begin recovering in mid-May and approach normal levels by mid-June.
Last week, the bank warned that if the strait remains largely closed to tankers for another month, the average price for Brent crude this year could exceed $100 per barrel. Should restricted traffic persist for more than a month, leading to further losses in Middle Eastern upstream production, Brent could average $120 per barrel in the third quarter and $115 in the fourth quarter.
On the downside, Goldman Sachs suggests that actual production shutdowns in the Persian Gulf may be lower than initially feared. Additionally, significant demand destruction, triggered by soaring prices and supply shortages, could lead to market rebalancing at prices "slightly lower than previously expected."
**Other Institutions Echo Two-Way Risks**
ING commodity strategists Warren Patterson and Ewa Manthey noted in a Thursday report that oil futures are stable or slightly lower, buoyed by market hopes for a two-week extension of the ceasefire and the resumption of talks to end the conflict.
"However, the physical market is tightening as oil flows through the Strait of Hormuz fail to recover," they said. After accounting for pipeline diversions and the minimal number of tankers transiting the strait, ING estimates approximately 13 million barrels per day of supply is currently disrupted. "This figure could rise further as the U.S. blockade continues."
In its base-case scenario, Nordic bank SEB assumes the Strait of Hormuz will operate at only 20% of normal capacity until mid-May, followed by a full recovery, with no further significant damage to oil or gas infrastructure in the Persian Gulf.
However, SEB reiterated in a Wednesday report that "the Strait of Hormuz cannot be unilaterally reopened" by the U.S., suggesting Iran could retain some control even if an agreement is reached.
SEB commodity analyst Ole Hvalbye wrote, "The risks to our outlook are clearly two-way: faster diplomatic progress could cause oil prices to retreat significantly from current levels; while a breakdown in talks, or worse, further infrastructure damage, could trigger a violent rally in Brent contracts, pushing prompt Brent prices above $150 per barrel."
As of 13:20 Beijing time on April 17, Brent crude futures were trading at $98.07 per barrel.