Goldman Sachs Sees Oil Potentially Hitting $110 as Gulf Tensions Disrupt Supply

Renewed attacks on oil tankers in the Strait of Hormuz are tightening the physical oil market and creating fresh upside risks to prices, according to strategists at Goldman Sachs. The bank warns that if the disruption to Persian Gulf exports continues to stall, Brent crude could overshoot $110 per barrel in the fourth quarter of 2026.

Gulf Flows Falter

According to a note from the bank, oil flows from the Persian Gulf have fallen sharply following the recent incidents. After recovering to more than 80% of pre-war levels in early June, exports have since dropped back to below 50%.

Goldman Sachs estimates this has left the market with a shortfall of 13.4 million barrels per day (mb/d) of Persian Gulf flows. Strategists led by Yulia Zhestkova Grigsby noted that this significant supply hit "would likely require greater demand destruction and renewed inventory draws" if the geopolitical situation does not de-escalate soon.

Price Scenarios and Risks

While Goldman Sachs maintained its base-case forecast for Brent crude at $80 per barrel for Q4 2026 and $75 per barrel for 2027, it stated that risks are now "skewed to the upside in the near term."

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The bank outlined several potential outcomes:

• Upside Scenario: A continued stall in the Gulf export recovery could drive Brent prices past $110 per barrel in the fourth quarter.
• Downside Scenario: If production exceeds expectations and demand recovers more slowly than anticipated, prices could fall into the $60s by the end of the year.
• Geopolitical Risk: Further escalation, such as a reinstated U.S. blockade of Iranian ports, could cut an additional 1.5-2 mb/d from Iranian exports, according to the bank's estimates.

Demand Picture Remains Mixed

On the demand side, Goldman Sachs suggested that crude imports in China "may have bottomed" after falling by 5 mb/d year-over-year in June. However, an immediate rebound is not expected due to China's elevated crude stockpiles, which stand at 1.9 billion barrels, equivalent to 117 days of demand.

Strategists anticipate Chinese imports will eventually rise as producers in the Middle East lower their official selling prices for July and August deliveries. Meanwhile, crude imports in other parts of Asia have returned to seasonal norms.