Goldman Sachs Flags Persistent Oil Price Risks Amid Conflict Escalation

Oil prices remain skewed to the upside in both the near term and into 2027, according to Goldman Sachs. The bank highlighted several past large supply shocks that persisted, indicating a possibility that oil prices could stay above $100 per barrel.

The recent conflict between Iran and Israel has triggered widespread shut-ins across Gulf states, leading to a surge in benchmark Brent crude prices to over $119 a barrel on Thursday. This sharp escalation in the war now in its third week has raised concerns about supply disruptions.

Goldman Sachs' base case assumes a gradual recovery in oil flows from April, with Brent easing to the $70s by the fourth quarter of 2026. However, the bank warned that long-term risks remain elevated due to uncertainty over the reopening of the Strait of Hormuz and potential damage to production capacity.

The bank analyzed past supply disruptions, finding that a shock linked to Hormuz would be the largest on record if it persists. Goldman Sachs also noted that any increase in perceived risks of U.S. export curbs could further widen the Brent-WTI spread.