Bloomberg Podcasts• Apr 27, 2026• 10:15

Goldman Hikes Oil Forecasts Again as Hormuz Shock Builds

Executive Summary

A severe disruption in the Strait of Hormuz has reduced maritime oil flows to 5-10% of normal levels, leading to an estimated cumulative loss of 2 billion barrels of Persian Gulf production by year-end.
The supply shock has prompted an upgraded forecast for Brent crude to $90/barrel by Q4, with a severely adverse scenario projecting prices as high as $120/barrel, significantly increasing recession risk.
Global oil demand forecasts have been revised from over 1 million bpd growth to stagnation, driven by significant demand destruction in jet fuel and petrochemicals, particularly in Asia.
The crisis is expected to have long-term consequences, including accelerating the transition to domestic energy sources like renewables, encouraging the buildup of strategic commodity reserves, and setting new precedents for the control of global maritime chokepoints.

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Concerns Raised

A protracted disruption at the Strait of Hormuz causing a 2 billion barrel cumulative supply loss.
Increased probability of a global recession, especially in vulnerable emerging markets, if oil prices reach the $120/barrel adverse scenario.
The slow and incomplete recovery of Persian Gulf production, with 10% of supply potentially remaining offline by year-end.
The conflict setting a dangerous precedent for the future management and potential tolling of global maritime chokepoints.

Opportunities Identified

Accelerated investment and policy support for the energy transition to domestic renewables like solar.
Increased national focus on building strategic reserves of oil and other critical commodities, enhancing energy security.
U.S. energy exporters can capitalize on high global prices, though they are approaching infrastructure capacity limits.

Key Themes

Geopolitical Weaponization of Maritime Chokepoints

The ongoing conflict has effectively weaponized the Strait of Hormuz, with oil flows collapsing to a fraction of their normal volume. This event demonstrates the immense geopolitical leverage held by nations controlling critical waterways, a lesson not lost on others, as evidenced by Indonesia's consideration of tolls for the Strait of Malacca.

This crisis sets a dangerous precedent, potentially encouraging other nations to exert control over strategic passages, which could fundamentally reshape global trade, energy security, and international maritime law.

Supply Shock and Price Volatility

The world is facing a massive supply shock, with a projected cumulative loss of 2 billion barrels of oil by the end of the year, equivalent to 20% of global inventories. The recovery is expected to be slow, with production only reaching 90% of pre-war levels by December, underpinning a sustained high-price environment.

The scale and duration of the supply loss create a highly bullish environment for crude prices, forcing a major upward revision in forecasts and introducing extreme volatility that complicates corporate and national economic planning.

Demand Destruction and Recession Risk

With inventory drawdowns insufficient to balance the market, high prices are now forcing significant demand destruction. This is most acute in price-sensitive sectors like aviation and petrochemicals and has led to a complete reversal of the global oil demand growth outlook for the year.

While not the base case, the high-price environment significantly elevates the risk of a global recession, particularly for energy-importing emerging markets in Asia and Africa, threatening global economic stability.

Strategic Realignment of Energy Security

The crisis is a stark reminder of the vulnerabilities of concentrated, globalized energy supply chains. In response, nations are expected to accelerate the transition to domestic energy sources like solar, follow China's lead in building large strategic reserves of critical commodities, and generally prioritize energy independence.

This represents a potential long-term structural shift in energy policy and investment, favoring resilience and domestic production over cost efficiency, which will have lasting implications for energy markets and infrastructure.

Differentiated Regional Vulnerabilities

The impact of the crisis is not uniform across the globe. Europe, particularly Italy, is highly vulnerable to natural gas disruptions, while the U.S. is acting as a supplier of last resort, pushing its export infrastructure to its limits and drawing down its own product stocks.

Understanding these regional differences is crucial for assessing economic risk, as the interconnected global market transmits price shocks everywhere, but the direct economic damage and policy responses will vary significantly by country.

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Topics

Strait of Hormuz Oil Supply Shock Brent Crude Price Forecast Demand Destruction Jet Fuel Petrochemicals Energy Security Geopolitics Maritime Chokepoints Recession Risk Emerging Markets Energy Transition Renewable Energy Strategic Reserves

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