Oil prices opened slightly lower this week, remaining close to last week’s closing figures, as tensions escalate in the Gulf region. Futures trading began on Sunday, just a day before the expiration of President Trump’s ultimatum to Iran regarding the Strait of Hormuz, a critical waterway for global oil shipments.
Brent crude, the international benchmark for oil pricing, experienced an initial surge upon opening but quickly retraced those gains, stabilizing around $106 per barrel. In parallel, West Texas Intermediate (WTI) crude, the U.S. benchmark, traded at approximately $97.90 per barrel.
The urgency behind this fluctuation stems from a post made by President Trump on Truth Social. In his comments, he issued a stark warning to Iran, demanding that it “FULLY OPEN, WITHOUT THREAT, the Strait of Hormuz,” asserting that failure to comply within 48 hours would result in U.S. military action against Iranian power plants, starting with the largest.
This threat follows a series of attacks attributed to the Iranian regime targeting energy infrastructure in the region, including significant incidents at Qatar’s Ras Laffan LNG export terminal, known as the world’s largest such facility. The recent escalation in hostilities has amplified concerns over potential disruptions to oil supplies.
In response to these developments, Goldman Sachs’ oil research team has revised its price forecasts, anticipating an increase in Brent prices to $110 per barrel through March and April. This adjustment is based on the expectation that oil flows through the Strait of Hormuz might remain severely impacted, at only 5% of normal levels, over an extended period that could last six weeks, followed by a gradual recovery.
The bank now projects average prices for 2026 at $85 per barrel for Brent and $79 for WTI, up from its previous estimates of $77 and $72, respectively. For 2027, Goldman expects averages of $80 for Brent and $75 for WTI.
Analysts at Goldman Sachs indicate that, in the short term, the market may demand a higher risk premium to encourage precautionary demand destruction as a hedge against potential shortages resulting from disruptions. They highlight the need for increased strategic stockpiling due to the concentration of oil production and spare capacity, which could lead to higher prices in the long term.
