Oil futures began trading slightly below last week’s closing prices as tensions escalated in the Gulf region, particularly surrounding President Trump’s ultimatum to Iran. With approximately 24 hours remaining on a 48-hour ultimatum issued by the president, markets reacted to the geopolitical climate, leading to volatile trading conditions.
Brent crude, which serves as the international pricing benchmark, initially saw a surge at the opening, rising momentarily before retreating to around $106 per barrel. Meanwhile, West Texas Intermediate (WTI) crude, the US benchmark, settled close to $97.90 per barrel.
In a statement on Truth Social late Saturday evening, President Trump announced that Iran had 48 hours to “FULLY OPEN, WITHOUT THREAT, the Strait of Hormuz.” He warned that if Iran failed to comply, the United States would take decisive action, stating, “within 48 HOURS from this exact point in time, the United States of America will hit and obliterate their various POWER PLANTS, STARTING WITH THE BIGGEST ONE FIRST!” This aggressive rhetoric followed a recent wave of Iranian threats targeting energy infrastructure across the Gulf, including significant sites like Qatar’s Ras Laffan LNG export terminal, the world’s largest facility of its kind.
As markets reacted to these developments, Goldman Sachs adjusted its oil price forecasts. The investment bank now anticipates that Brent crude will trade at $110 per barrel for March and April, a sharp increase from a prior projection of $98 per barrel. This adjustment comes on the assumption that oil flow through the Strait of Hormuz, a critical chokepoint for global oil transport, will be drastically reduced to only 5% of normal levels for an extended period.
Goldman Sachs also revised its long-term estimates, projecting an average price of $85 per barrel for Brent and $79 for WTI in 2026, up from previous forecasts of $77 and $72, respectively. For the following year, 2027, forecasts suggest an average of $80 per barrel for Brent and $75 for WTI.
The analytics team at Goldman noted that the market may soon require a higher risk premium to safeguard against potential disruptions. They emphasized that the high concentration of oil production and spare capacity could lead to increased strategic stockpiling, which in turn could influence long-term pricing dynamics.
This unfolding situation in the Gulf has set the stage for potential market volatility, as traders and analysts closely monitor the geopolitical landscape and its implications for global oil supply.
