Oil futures began trading slightly below last week’s closing prices as the market braced for President Donald Trump’s looming ultimatum to Iran. This ultimatum, set for 48 hours, threatens military action unless Iran allows free passage through the Strait of Hormuz. As of the opening Sunday, Brent crude, the international pricing benchmark, initially saw a surge in prices but quickly retracted those gains, trading at approximately $106 per barrel. Meanwhile, West Texas Intermediate (WTI) crude was changing hands at about $97.90 per barrel.
In a bold announcement on Truth Social Saturday evening, Trump warned that Iran must “FULLY OPEN, WITHOUT THREAT, the Strait of Hormuz,” or face severe repercussions. He specifically stated that the United States would target Iran’s power plants, starting with the largest, if the demands were not met. This threat follows a series of Iranian attacks on energy infrastructure in the Gulf region, notably targeting Qatar’s Ras Laffan LNG export terminal, which is recognized as the world’s largest facility of its kind.
In light of these geopolitical tensions, Goldman Sachs has adjusted its oil price forecasts. The bank’s oil research team, led by Daan Struyven, now predicts that Brent crude prices could reach $110 per barrel through March and April, a notable increase from a previous target of $98 per barrel. This revision is based on the assumption that oil flows through the Strait of Hormuz will be severely diminished, operating at only 5% of normal levels for an extended six-week period, followed by a gradual recovery over one month.
Goldman Sachs has also amended its long-term price projections, estimating an average price of $85 per barrel for Brent and $79 per barrel for WTI in 2026, up from earlier estimates of $77 and $72, respectively. The forecast for 2027 suggests that Brent and WTI will average $80 and $75 per barrel.
Struyven, along with colleagues Yulia Grigsby and Alexandra Paulus, noted that in the short term, the oil market may require a growing risk premium. This increase is necessary to stimulate precautionary demand, especially in the context of potential long-term supply disruptions. A high concentration of production and spare capacity is likely to lead to increased strategic stockpiling, thus influencing long-term price dynamics. As these developments unfold, market participants will be closely monitoring both the geopolitical landscape and its implications for oil supply and pricing.
