Goldman Sachs Oil Price Forecast: $76–$93 Fair Value If Hormuz Disruption Continues - Exchange Rates UK

What the desk is arguing

Goldman Sachs suggests that continued disruptions in the Strait of Hormuz could substantially impact oil prices, with projections indicating a range of $76 to $93 per barrel. The bank posits that the geopolitical climate surrounding this critical passageway could drive supply constraints, consequently elevating prices.

The underlying assumption is that ongoing tensions will likely restrict oil shipments, thus skewing supply and demand dynamics. The counterfactual being implicitly dismissed is that stability in the region would lead to more predictable, lower pricing consistent with historical averages.

Where it sits in our coverage

Our current consensus target for oil prices aligns with market expectations, reflecting a more stable geopolitical outlook. The firm spread indicates an anticipated range that aligns closely with Goldman's upper forecast when considering potential volatility catalyzed by geopolitical events.

With that in mind, we highlight the following specific firm targets:

• Barclays: $82.00
• JPMorgan: $88.00
• BNP Paribas: $75.00

How other firms see it

Firms are split on their outlook for oil prices in light of potential disruptions. JPMorgan remains aligned with Goldman's position on price appreciation due to geopolitical tensions.

• Barclays: Aligned with Goldman, optimistic on price resilience.
• BNP Paribas: Contrarily cautious, expecting a moderation in pricing potential.

Overall, the market finds itself navigating a complex mix of geopolitical risks and fundamental supply-demand factors shaping oil price expectations.