By Jake Lloyd-Smith

(Bloomberg) — Goldman Sachs Group Inc. raised its oil price forecasts for 2026 due to the prolonged disruption of flows through the Strait of Hormuz, which it described as the largest-ever supply shock for the global crude market.

Brent (BZ=F) is expected to average $85 a barrel in 2026, up from an earlier forecast of $77, analysts including Daan Struyven said in a note. The full-year outlook for West Texas Intermediate (CL=F) was hiked to $79 from $72, they said.

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The revisions rested in part on an assumption that flows through Hormuz would remain at only 5% of normal levels for six weeks, followed by a one-month recovery, they said in the note dated March 22. Over time, that stands to result in cumulative losses of just over 800 million barrels, the bank estimated.

Energy markets have been pitched into turmoil by the US-Israeli war with Iran, with hostilities now entering a fourth week with no sign of resolution. President Donald Trump handed Iran a two-day ultimatum to reopen Hormuz — which connects the Persian Gulf to global markets — or see its power plants bombed. Tehran threatened reprisals.

Echoing Goldman Sachs’ appraisal of the severity of the challenge for global energy markets, International Energy Agency Executive Director Fatih Birol told a media event in Canberra, Australia, on Monday that the effect of the current disruptions was equivalent to the two major oil crises in the 1970s, and the 2022 natural gas crisis after Russia invaded Ukraine, “all put together.”

The oil market has been roiled by the Iran war, with prices swinging wildly. Source: Bloomberg