Goldman Sachs Raises Oil-Price Forecast Amid Intensifying Hormuz Crisis

Oil Prices Climb as Strait of Hormuz Closures Fuel "Extreme" Inventory Draws

Goldman Sachs Group Inc. has revised its oil-price forecasts upward, citing the prolonged closure of the Strait of Hormuz as a key driver of "extreme" inventory draws. Analysts including Daan Struyven and Yulia Zhestkova Grigsby expect Brent to average $90 a barrel in the fourth quarter, a $10 increase from their previous outlook of $80.

The bank has also raised its forecasts for the current and third quarters for both Brent and West Texas Intermediate, the global crude benchmark. This revision is the latest in a series of updates as the ongoing war continues to impact global oil markets. In their April 27 note, the analysts estimate that 14.5 million barrels a day of Persian Gulf crude production losses are driving global oil inventories to draw at a record 11 to 12 million barrel-a-day pace in April.

The Strait of Hormuz, a key chokepoint in the oil trade, has been largely closed due to the Iran war, with transits plummeting to near zero. This has led to a significant increase in oil prices, with Brent rallying almost 50% since the start of the conflict in late February. The analysts warn that this extreme inventory draw is not sustainable and could be exacerbated by further demand losses if the supply shock persists.

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Goldman Sachs estimates that there will be a deficit of 9.6 million barrels a day this quarter, compared to a surplus last year. In contrast, Morgan Stanley estimates that oil exports from the Persian Gulf have slumped by 14.2 million barrels a day due to the Hormuz closure, resulting in a drop of 4.8 million barrels a day in global stockpiles. Weaker demand has contributed to the decline in stockpiles, according to the bank.

Both Goldman and Morgan Stanley have revised their oil price forecasts upward, with Goldman expecting Brent to average $100 a barrel in the current quarter and $93 in the third, while Morgan Stanley expects futures to average $110 a barrel in the current quarter, $100 in the third, and $90 in the fourth.