New Delhi: Analysts at Goldman Sachs have sharply raised their oil price forecasts for 2026, citing severe disruption to shipments through the Strait of Hormuz, which they described as the biggest supply shock ever to hit the global crude markets. 

Brent seen at $85, WTI at $79 as geopolitical risks intensify

The prominent investment bank has expected that Brent crude futures will average $85 per barrel in 2026, an increase of 10.38 per cent from its earlier estimate of $77.

Similarly, US West Texas Intermediate (WTI) is projected at $79 per barrel, up 9.72 per cent compared to the previous forecast of $72, analyst Daan Struyven said in a note.

The upward revision is based on the assumption that oil flows through the key Hormuz passage will operate at just 5 per cent of normal capacity for six weeks, before gradually normalising over the following month.

US–Israel–Iran conflict adds volatility to global crude markets

Oil markets have been roiled by the ongoing conflict involving the US, Israel and Iran, now in its fourth week with no clear end in sight. President Donald Trump over the weekend issued a two-day ultimatum to Tehran to reopen the critical shipping route or risk attacks on its energy infrastructure, prompting warnings of retaliation from Iran.

"The unprecedented disruption could force policymakers and investors to reassess structural vulnerabilities in global energy supply, particularly the heavy concentration of production and spare capacity in the Middle East," according to Goldman Sachs.

Despite tightening supply conditions in Asia, crude inventories in OECD economies across the US and Europe continue to build, reflecting the fact that global supply had been exceeding demand before the conflict began.

The bank has also estimated that crude output losses in the Middle East could rise from 11 million barrels per day at present to a peak of 17 million barrels per day.

Assuming a full recovery over four weeks after normal operations resume, total cumulative losses are expected to exceed 800 million barrels.

Brent crude futures on Monday jumped as much as 0.73 per cent to an intraday high of $113.01 per barrel as of 10:18 am, while crude US WTI was at $101.50, up 3.32 per cent from the previous close.

(IANS)