Goldman Sachs' latest research report indicates that the uncertain situation in the Middle East is subjecting the crude oil market to a test of opposing forces. Amid intense tug-of-war between bullish and bearish factors, the future direction of the oil market remains unclear.
In a Tuesday report, Goldman Sachs noted that its forecast for average 2026 Brent crude prices at $83 per barrel and WTI crude at $78 per barrel faces both upside and downside risks.
The institution stated that this is primarily due to increasing uncertainty surrounding developments in the Middle East and the status of crude oil shipments through the Strait of Hormuz.
According to Goldman, the sharp reduction in traffic through the Strait of Hormuz constitutes the most significant upside risk to its oil price forecast. The bank estimates that current crude flow through the strait stands at just 10% of normal levels, equivalent to 2.1 million barrels per day.
The U.S. Navy began implementing a blockade on vessels entering and leaving Iranian ports and coastal areas on Monday, adding further upside risk to oil prices. Recent crude shipments through the strait have been largely handled by tankers associated with Iran.
Simultaneously, crude production cuts in the Middle East have fallen short of Goldman's mid-March expectations, creating downward pressure on oil prices.
The Wall Street investment bank estimates that average crude production outages in the Persian Gulf region reached 8 million barrels per day in March. This figure aligns broadly with OPEC secondary source data but falls below the International Energy Agency's estimate of 10 million barrels per day.
Furthermore, announcements of U.S.-Iran ceasefire agreements and growing hopes for a near-term peace settlement have caused geopolitical risk premiums to recede, adding additional downward pressure on oil prices.
Goldman also pointed out that the drawdown rate of global visible crude inventories is slowing significantly. Over the past week, projected inventory drawdowns have decreased substantially from approximately 7 million barrels per day month-to-date to around 2 million barrels per day.
This slowing trend may indicate that increasing inventory draws are shifting to onshore refined product stocks in non-OECD Asian regions. Alternatively, it could signal an acceleration in crude demand loss.
Goldman estimates that naphtha demand in April may have plunged by about 1.3 million barrels per day compared to February levels, while aviation fuel demand remains approximately 500,000 barrels per day below normal trends.