Goldman: Prolonged Hormuz Disruption Could Drive Brent Above $120 in Q4, but Not Base Case

Goldman Sachs said Brent crude could climb above $120 a barrel in the fourth quarter if disruption at the Strait of Hormuz persists, stressing this is not its central scenario. The bank attributed the recent rebound in oil prices to escalating tensions in the Middle East and Persian Gulf flows running at less than 45% of prewar levels. In Goldman's base case, conditions in the region gradually improve. Under that view, Brent is forecast at $80 a barrel in Q4 and $75 next year. Why it matters: An energy-price shock could weigh on risk appetite if shipping disruption keeps inflation pressures and growth risks elevated. Market sentiment: Cautiously bearish and risk-off, driven by macro headlines and elevated volatility. Goldman's warning that Brent could top $120 in Q4 if the Hormuz disruption continues is seen as a potential drag on risk-taking. Historical context: In March 2021, the Ever Given blockage in the Suez Canal supported oil prices, with ICE May Brent trading at $63.90 a barrel, up $3.13 from its March 24 settlement. S&P Global estimated the waterway carried about 10% of seaborne oil trade and 8% of global LNG trade. The key difference: the Suez episode was an accident, while the current risk is rooted in geopolitical disruption. Ripple effects: Higher energy prices could lift inflation expectations and reduce demand for risk assets. If the disruption persists, the oil risk premium may stay elevated and keep cross-asset volatility high. If conditions ease, those pressure channels may fade. Opportunities and risks: If Middle East tensions cool and Brent follows Goldman's base case, adding risk exposure after volatility subsides could signal a shift back to risk-on positioning. If Persian Gulf flows remain depressed and disruption continues, trimming high-beta exposure may serve as a hedge.