Oil could end the year at $100 if flows don't normalize soon, says Goldman Sachs

By Nora Redmond

The investment bank's change in outlook relies on the assumption that exports from the Persian Gulf won't normalize until the end of June.

Goldman Sachs has again increased its target prices for oil as production and the flow of global supplies continue to be disrupted by the effective closure of the Strait of Hormuz.

The investment bank is now expecting West Texas Intermediate, the U.S. benchmark, (CL00) (CL.1) to reach an average of $83 a barrel, up from $75, and Brent crude, the international benchmark, (BRN00) (BRNM26) to rise to $90 a barrel by the end of the year, up from $80.

The December Brent contract (BRNZ26) on Monday was trading just above $86.

Before the war, Goldman had expected Brent oil prices to decline to $60 in the fourth quarter.

Analysts at Goldman Sachs led by Daan Struyven, co-head of global commodities research and head of oil research, wrote on Sunday that the change in outlook rests on the assumption that exports from the Persian Gulf won't normalize until the end of June, compared to a prior estimate of mid-May, and expectations of slower production recovery from the region.

It comes after a weekend of updates regarding the war in Iran and continued concerns from investors over the possibility of a prolonged conflict.

On Saturday, President Donald Trump told Jared Kushner and Steve Witkoff not to travel to Pakistan's Islamabad for further negotiations with a delegation from Tehran. Iran's Foreign Minister Abbas Araghchi described the talks with Pakistani officials as "very fruitful" but said he's not sure yet if Washington is "truly serious about diplomacy."

Late on Sunday, Axios reported that Iran had submitted a proposal to the U.S. to reopen the strait in return for postponing discussions on the Islamic Republic's nuclear concessions. It's unclear at this point what the White House's response to this offer might be.

Brent crude prices are up about 67% since the start of the year, currently hovering above the $100 threshold, while WTI prices have risen by almost 70% in the same period.

The analysts at Goldman Sachs said they estimate that between 11 and 12 million barrels per day were taken from storage in April as crude production losses resulted in 14.5 million less barrels from the Persian Gulf a day.

They wrote that they see global oil demand falling by 1.7 million barrels per day year-on-year in the second quarter because of the spike in the prices of refined products.

"Because extreme inventory draws are not sustainable, even sharper demand losses could be required if the supply shock persists longer," the analysts added.

In Goldman Sachs' "adverse" scenario, Brent crude averages at just over $100 a barrel by the end of the year if exports from the Gulf normalize by the end of July. If flows recover below 70% of capacity, they could see Brent crude reaching $120 a barrel. In a situation where exports normalize by mid-June, there is no reduction in capacity and the U.S and the Organization of the Petroleum Exporting Countries provide stronger supply responses, oil could fall to just under $80 a barrel.

-Nora Redmond

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04-27-26 0636ET