Goldman Sachs resets oil-price bets as war rages on

Core Insights - The ongoing U.S.-Israel war against Iran has significantly impacted global oil prices, with Brent crude reaching $112.19 per barrel, an increase of 84% year-to-date and 63% since late January [1] - Gasoline prices in the U.S. have surged to an average of $3.912 per gallon, reflecting a 37.8% increase for the year and 33.5% since the end of January [2] - Goldman Sachs predicts that oil prices are likely to continue trending higher, influenced by the ongoing conflict and its effects on oil supply [2] Oil Supply and Geopolitical Factors - The Strait of Hormuz is critical for global oil and LNG shipments, with over 20% of the world's crude oil passing through it [3] - Iranian forces have employed various tactics, including mines and drones, to disrupt oil tanker movements, limiting access to the strait [4] - The conflict has broader implications, as Israel has targeted Hezbollah in Lebanon, and Iran has threatened U.S. military operations by launching missiles towards Diego Garcia [4] Market Recovery Projections - Goldman Sachs indicates that a prolonged conflict will delay recovery in oil production among Gulf states, potentially taking years [5][6] - If the Strait of Hormuz reopens fully by April and damage to production facilities is minimal, Brent crude prices could stabilize around $70 by Q4 2026 [7] - Current Brent crude prices are expected to command a higher premium over U.S. Light Sweet crude, which is currently about $14 per barrel higher [6]