Goldman Says Hormuz Disruption Could Push Brent Above $120 in Q4

Key Point

Goldman Sachs said Brent crude could rise above $120 per barrel in the fourth quarter if disruption at the Strait of Hormuz persists. Goldman Sachs emphasized that this is not its base case scenario. Goldman Sachs said escalation in the Middle East and Persian Gulf flows below 45% of pre-war levels have driven the rebound in oil prices. Under Goldman Sachs' base case, the situation in the Middle East will ease, and Brent is forecast at $80 per barrel in the fourth quarter and $75 per barrel next year.

Why it matters: Energy-price shocks could pressure risk appetite if shipping disruption keeps inflation and growth risks elevated.

Market Sentiment

Cautiously Bearish, Risk-off, Macro-driven, Volatile.

Reason: Goldman Sachs said Brent could exceed $120 per barrel in the fourth quarter if the Strait of Hormuz disruption persists, which may pressure risk appetite.

Similar Past Cases

In March 2021, the Ever Given blockage in the Suez Canal supported oil prices, with ICE May Brent trading at $63.90 per barrel and up $3.13 per barrel from its previous settlement on March 24. S&P Global also said about 10% of seaborne oil trade and 8% of global LNG trade passed through the waterway. (S&P Global) The difference is that the Suez case was a shipping accident, while the current risk is tied to geopolitical disruption.

Ripple Effect

Higher energy prices could lift inflation expectations and reduce demand for risk assets. If shipping disruption persists, then oil risk premium could remain elevated and keep cross-asset volatility high. If the situation eases, then the pressure channel may weaken.

Opportunities & Risks

Opportunities: If the situation in the Middle East eases and Brent tracks Goldman Sachs' base case, then adding risk exposure after volatility declines can confirm a risk-on shift.

Risks: If Persian Gulf flows stay depressed and the disruption persists, then reducing high-beta exposure is a potential hedge signal.