Key Points:
- Goldman Sachs pushed back its expected timeline for a full recovery in Middle Eastern oil exports to late August.
- The delay is offset by a smaller-than-expected global supply deficit of 5 to 6 million barrels per day in Q2.
- The bank lowered its 2027 average Brent oil price forecast by $5 to $80 per barrel, citing weak demand.
- Accelerating electric vehicle adoption in China continues to erode long-term global gasoline demand permanently.
Goldman Sachs has pushed back its expected timeline for a full recovery in Middle Eastern oil exports, now projecting that Gulf shipping volumes will normalize by late August rather than late June. This meaningful delay reflects the lingering logistical and security complexities of reopening the critical Strait of Hormuz following recent geopolitical tensions. However, the prominent Wall Street investment bank emphasized that a smaller-than-expected global supply deficit has cushioned the market from a severe energy crisis, keeping its fourth-quarter price forecast for Brent crude steady.
This revised outlook comes immediately after President Donald Trump announced a landmark peace agreement to end the monthslong conflict and reopen the Strait of Hormuz within 30 days. Following the news, international crude prices plummeted by approximately 5 in a single session, with Brent crude falling to a two-month low of $86.45 per barrel and West Texas Intermediate dropping to $83.80 per barrel. Investors grew increasingly confident that commercial vessels would soon safely navigate the vital trade route, which typically handles about 20% of the world’s daily petroleum supply.
Although the initial military conflict cut Middle East liquids production sharply by an estimated 14 million to 15 million barrels per day, the actual global supply deficit in the second quarter remained far more limited. The investment bank estimates the net global deficit at just five million to six million barrels per day. This much smaller shortfall occurred because a massive pre-war oversupply and severe global demand destruction successfully cushioned the initial physical supply shock.
The bank’s economists, led by Daan Struyven, explained that the global market does not require perfect shipping conditions through the Strait of Hormuz for export volumes to normalize. Thanks to alternative pipeline routes and transshipment terminals—such as those in Yanbu, Fujairah, the Gulf of Oman, and Ceyhan—producers can reroute substantial volumes of crude. Consequently, Gulf exporters can achieve their pre-war export benchmark of 23 million barrels per day even if Hormuz flows recover to just 70% of their pre-conflict levels.
While the short-term market remains tight, the Wall Street giant lowered its longer-term oil price forecast for 2027 by $5 to average $80 per barrel, down from its previous estimate of $85. Analysts attribute this downward revision to a potent combination of robust supply growth from non-OPEC+ producers and structural weakness in demand. Specifically, rising production in the United States, Brazil, Guyana, Venezuela, and the United Arab Emirates is outpacing global demand, creating a comfortable supply buffer for the coming years.
On the demand side, a permanent structural transition in China’s energy mix is reshaping the global consumption curve. The bank’s report assumes that just over 10% of the recent weakness in demand will persist indefinitely as China’s shift to electric vehicles (EVs) and alternative transport fuels accelerates. As the world’s largest crude importer steadily reduces its reliance on refined petroleum products, traditional oil-producing nations must adapt to a long-term decline in global gasoline demand.
Despite establishing a moderate baseline forecast, the bank warned that commodity prices remain highly sensitive to evolving geopolitical scenarios. Under an adverse scenario where export disruptions in the Persian Gulf persist longer than expected, Brent crude prices could easily surge back above $110 per barrel by the end of this year, and potentially hit $140 in 2027 if the Strait remains blocked year-round. Conversely, if supplies recover faster and global demand weakens further, prices could plunge to $70 by late 2026 and hit a low of $60 in 2027.
The revised timeline from the U.S. investment giant demonstrates that the global energy market is successfully navigating one of its most severe historical crises. By drawing down pre-existing stockpiles, utilizing alternative pipelines, and relying on robust supply growth from the Americas, the international market has avoided a catastrophic price spiral. As commercial vessels prepare to return to the Strait of Hormuz, the gradual normalization of oil exports through the end of August will provide the necessary stability to keep the global economy from sliding into a stagflationary recession.
