Goldman Sachs Puts $120 Brent on the Table as Hormuz Flows Stay Suppressed
With Persian Gulf flows running below 45% of pre-war levels, Goldman's upside scenario is moving from tail risk toward base case for some traders.
ICE Brent crude front-month was trading at $97.25 a barrel on Monday (2026-09-07), up more than 1% on the session, as Goldman Sachs analysts warned that prices could exceed $120 a barrel in the fourth quarter if disruptions through the Strait of Hormuz fail to ease.8,5
Persian Gulf flows have already fallen below 45% of pre-war levels, Goldman's commodity analysts said in a note quoted by Bloomberg, a threshold that has pushed prices sharply higher after months of grinding decline. The bank estimated in June (2026-06-12) that normalization might arrive by late August (2026-08-31), with Hormuz flows recovering to roughly 70% of pre-war volumes through rerouting and redirection. That deadline has passed without a resolution.3,1
The move in Brent has been abrupt. From a nearly 30% decline recorded in the second quarter, ICE Brent front-month has clawed back ground rapidly, rising around 12% over three sessions in early July (2026-07-09) after fresh US strikes on Iranian military sites. By Thursday (2026-07-09), Brent futures had settled at $85.28 a barrel, with WTI at $80.02, before both contracts pushed further toward current levels.2
Goldman's Q4 scenario involves Brent averaging above $100 a barrel if the Strait of Hormuz stays disrupted, with a peak above $120 possible in an acute escalation. The analysts described the risks to that outlook as tilted to the upside, pointing to continued shipping disruptions and the possibility of further interruptions beyond Hormuz.5,6
But the bank's own framework contains a significant counterweight. Rising output from the United States, Brazil, Guyana, Venezuela and the UAE, combined with structural shifts in Chinese demand, would keep downward pressure on prices in a normalization scenario. Goldman reportedly cut its 2027 Brent forecast to $80 a barrel in June (2026-06-12), a signal that the bank sees the supply glut as the dominant force once the geopolitical premium fades.1
Brent's gain to $97.25 on Monday (2026-09-07) sits well above that $80 medium-term anchor, which illustrates the gap between what the forward curve is pricing for next year and what current disruption is doing to near-term barrels. The spread between NYMEX WTI front-month at $92.23 and Brent at $97.25 has widened, consistent with Hormuz-related supply stress falling disproportionately on Middle Eastern grades that compete with Brent-linked cargoes.6
The market also has to contend with multi-route disruption. Rigzone reported in late July (2026-07-21) that Brent rose 2% to settle around $91 a barrel as traders weighed threats spanning the Strait of Hormuz, the Red Sea, and a key Kazakh export terminal on Russia's Black Sea coast. Three simultaneous chokepoints rarely stay simultaneously stressed, but the combination gave traders reason to build positions in front-month contracts rather than wait.7
Goldman's June note acknowledged that the global supply deficit was limited to roughly 5–6 million barrels per day in Q2 because weaker demand and pre-existing oversupply cushioned the Hormuz shock. That buffer has not disappeared, and it complicates any straightforward reading of the $120 target. Supply disruption of 45% through the world's most critical oil chokepoint would under normal demand conditions be catastrophic for prices; the fact that markets spent much of Q2 selling off suggests the demand side is doing real work as an offset.1
VIX rose 4.4% to 15.16 on Monday (2026-09-07), a modest uptick that does not signal broad financial stress but points to traders hedging short-term event risk. Gold fell 0.8% to $4,397.18 an ounce, suggesting the bid in crude is being read as a supply event rather than a broad risk-off move. The dollar index slipped 0.24% to 98.92, which provides marginal support to dollar-denominated crude benchmarks. [LIVE PRICES]
The contrarian case for Brent is straightforward: Goldman itself said in mid-2026 that a faster normalization of Hormuz flows and softer demand could push Brent toward $70 a barrel, and rising non-OPEC supply is not going away. Non-OPEC producers benefit directly from elevated prices and have every incentive to accelerate output. Goldman reportedly flagged that a coming inventory rebuild cycle would not be enough to offset the glut expected in 2027.1,3
The number to monitor now is the Hormuz flow rate. Goldman's original assumption of 70% recovery by late August (2026-08-31) has not materialised. If flows remain below 45% through September, the Q4 price outlook shifts materially toward the bank's upside scenario rather than its base case.3,5,84,35,67,12