Oil prices experienced a slight decline at the beginning of futures trading on Sunday, hovering just below last week’s closing levels. With approximately 24 hours left on President Trump’s ultimatum to Iran, market fluctuations were evident. Brent crude, the international pricing benchmark, initially saw a surge but quickly surrendered those gains, settling around $106 per barrel. Meanwhile, West Texas Intermediate (WTI) crude was trading near $97.90 per barrel.
The backdrop for these price movements stems from President Trump’s assertive statement made via Truth Social, where he gave Iran a 48-hour deadline to “FULLY OPEN, WITHOUT THREAT, the Strait of Hormuz.” He warned of significant retaliation, including potential strikes on Iranian power plants, contingent on Iran’s compliance. This threat follows a week of Iranian-hosted attacks targeting key energy infrastructure in the Gulf, notably including assaults on Qatar’s Ras Laffan LNG export terminal, the largest of its kind globally.
In a noteworthy response to current market conditions and geopolitical tensions, Goldman Sachs revised its price forecasts for oil. The bank’s oil research team, led by Daan Struyven, adjusted their expectations for Brent crude, anticipating it could reach $110 per barrel throughout March and April, an increase from their earlier $98 estimation. This adjustment is predicated on expectations that activity in the Strait of Hormuz could remain severely disrupted, with oil flows reduced to just 5% of normal levels for an extended six-week period, followed by a gradual recovery over the following month.
Goldman Sachs also updated its long-term outlook, now projecting average prices of $85 for Brent and $79 for WTI in 2026, up from previous estimates of $77 and $72, respectively. For 2027, the bank anticipates average prices of $80 for Brent and $75 for WTI. Market analysts noted that the current environment might necessitate a growing risk premium to stimulate demand while also hedging against potential shortages resulting from prolonged disruptions. Recognizing the inherent risks due to the high concentration of oil production and the limited spare capacity could lead to increased strategic stockpiling and elevated long-term prices.
