Bank projects Brent crude could soar to $110 as rising geopolitical risks threaten global energy supply routes; natural gas markets also bracing for potential disruption.
Goldman Sachs has raised alarm over potential shocks to global energy markets, warning that escalating tensions in the Middle East—especially concerning the strategic Strait of Hormuz—could push oil prices sharply higher.
In a research note dated June 23, the investment bank estimated that if oil flows through the critical waterway were cut by half for one month, followed by a prolonged 10% reduction for the next 11 months, Brent crude could spike briefly to $110 per barrel. The bank anticipates prices would later moderate, averaging around $95 per barrel in the fourth quarter of 2025.
The Strait of Hormuz is a vital artery for global oil and gas shipments, with roughly one-fifth of the world’s oil passing through its narrow passage. A blockade or significant disruption would have ripple effects across global energy and financial markets.
The concerns come on the heels of coordinated U.S. and Israeli strikes on Iran’s nuclear infrastructure over the weekend, which sent oil prices surging on Monday to their highest levels since January. Geopolitical tensions have stoked fears of Iranian retaliation, including threats to shut down the Strait—an action that would severely impact supply chains and global energy security.
According to Goldman Sachs, prediction markets now indicate a 52% probability that Iran could close the Strait of Hormuz in 2025, citing data from Polymarket. The bank outlined several potential scenarios based on varying levels of Iranian oil disruption:
- Scenario One: A 1.75 million barrels per day (bpd) decline in Iranian oil supply for six months could drive Brent to a peak of $90 per barrel, eventually falling into the $60s by 2026.
- Scenario Two: If the supply cut persists, prices would still peak near $90 but stabilize between $70 and $80 per barrel in 2026 due to tighter inventories and reduced global spare capacity.
Goldman Sachs emphasized that while the outlook remains highly fluid, “economic incentives—including those of the U.S. and China—are strong to avoid a long-term disruption of flows through the Strait of Hormuz.”
Beyond oil, European natural gas markets are also poised for potential volatility. The bank projected that the Dutch TTF benchmark, a key indicator for European gas prices, could climb closer to 74 euros per megawatt-hour ($25/MMBtu) as markets price in the risk of broader regional instability.
However, U.S. natural gas prices are expected to remain relatively stable. Goldman cited the country’s structural advantages, including robust LNG export capabilities and minimal reliance on imports, as buffers against Middle East-driven price shocks.
Iran’s decision on whether to close the Strait lies with its Supreme National Security Council, state-run Press TV reported. The move has reportedly gained support in Iran’s parliament following recent U.S. airstrikes.
As energy markets brace for possible escalation, Goldman’s warning serves as a stark reminder of the Strait of Hormuz’s significance—not just as a shipping lane, but as a geopolitical flashpoint with far-reaching economic consequences.
