Goldman Sachs just raised its March Brent forecast above $100

Core Viewpoint - The oil market is experiencing a significant shift, with Goldman Sachs projecting Brent crude to average above $100 a barrel in March, indicating a transition from a geopolitical scare to a supply squeeze [1][2]. Price Projections - Goldman Sachs expects Brent to average $98 in March and April, with a potential drop to $71 by the fourth quarter, contingent on the duration of disruptions in the Strait of Hormuz [3][6]. - In a severe disruption scenario lasting a month, the average price could reach $110, with spot prices potentially exceeding the 2008 peak of $147 if supply remains constrained [4][6]. Market Dynamics - The market is currently pricing in persistent disruptions, with over 20% of global oil flows passing through the Strait of Hormuz, leading to elevated prices in the near term due to ongoing supply disruptions from the Iran conflict [6][9]. - Goldman Sachs has indicated that the war premium has become a significant factor in current pricing, affecting inflation expectations and operational costs across various sectors [9]. Historical Context - Goldman Sachs has adjusted its forecasts multiple times in response to geopolitical events, raising its Brent forecast to $76 shortly after military actions involving the U.S. and Israel, highlighting the market's sensitivity to geopolitical risks [8].