Brent crude rose by $2 to just under $80 per barrel overnight as markets began to price in a higher probability of supply disruptions linked to escalating tensions with Iran, with strategists at Goldman Sachs forecasting a geopolitical risk premium of $12 per barrel.
“While we still assume no significant disruptions to oil and natural gas supply, the downside risks to energy supply and the upside risk to our energy price forecasts have risen,” the team led by Daan Struyven said in a note.
Goldman outlines multiple disruption scenarios. In the event that Iran’s seaborne oil exports decline by 1.75 million barrels per day due to sanctions or infrastructure damage, Brent could temporarily climb to $90.
If the disruption persists, prices would likely remain elevated, between $70 and $80 in 2026.
More severe price spikes are modeled under a broader regional conflict. If oil flows through the Strait of Hormuz were cut by 50% for one month and then down 10% for another 11 months, the strategists estimate Brent would “briefly jump to a peak of around $110.”
That projection assumes oil reserve releases and use of bypass pipelines, but also a sharp jump in risk premia.
Natural gas markets are also seen as vulnerable. European TTF prices have already moved closer to the €74/MWh threshold, which previously triggered demand destruction during the 2022 crisis.
“A hypothetical sustained and very large disruption of natural gas supply transit through the Strait of Hormuz would likely lift European natural gas prices above €100/MWh on our estimates,” the note continued.
3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads. Despite the increased volatility, Goldman emphasized that global powers such as the U.S. and China have strong economic incentives to prevent a prolonged disruption of transit through the Strait of Hormuz, which channels nearly 20% of global oil supply.
