Goldman Sachs Halves Recession Odds as Brent Tops $100 Again, Fed Hike Bets Surge
Goldman Sachs cut its 12-month recession odds to 15%, but Brent surging past $100 has pushed Fed rate hike bets to 72%.
Goldman Sachs Chief Economist Jan Hatzius told Yahoo Finance during the week of 2026-09-07 that the bank has cut its 12-month U.S. recession probability to 15%, down from 30% in March 2026 when the U.S.-Iran conflict first erupted. Six months of resilient global growth and inventory cushions built before the war allowed for that revision. But the same week, ICE Brent crude front-month surpassed $100 per barrel for the first time since July, reviving the concerns Hatzius said had receded.5
The timing is uncomfortable. CME FedWatch data showed that as of September 10, traders put the probability of a 25-basis-point rate hike at the Federal Reserve's meeting this week (week of 2026-09-14) at 72.4%, up sharply from 49.4% a week earlier. That move traces directly to the oil price surge. ICE Brent crude front-month was trading at $107.67 per barrel as of early Monday (2026-09-14), and a Fed that hikes into triple-digit oil adds a monetary tightening shock on top of an energy cost burden that was already elevated.5
The conflict, now in its seventh month, began in late February 2026. Iran effectively halted nearly all non-Iranian shipping through the Strait of Hormuz, choking off roughly a fifth of global oil supply, according to IG market analyst Tony Sycamore. That initial disruption drove Brent crude to a peak of $119.50 per barrel shortly after fighting began.1,3
The path since has been volatile. By Friday (2026-06-26), ICE Brent crude front-month had crashed to $72 per barrel — its lowest since February 27 — as Persian Gulf exports recovered to roughly 75% of pre-war levels, Bloomberg calculations showed. That single month erased 20% of Brent's value, the steepest monthly drop since March 2020's 47% plunge.3
The rebound from those June lows reflects the repeated failure of diplomatic attempts more than any easing of supply constraints. Six previous negotiations have collapsed. Sycamore cautioned in late May 2026 that further talks could "collapse at the 11th hour, much like the five previous attempts before it." Prices have moved on headline risk with little forewarning.1
Citi had attempted to frame a more stable middle ground. The bank raised its Q3 2026 Brent crude forecast to $80 per barrel from $75 on Friday (2026-08-07), citing slow U.S.-Iran negotiations while expressing confidence that a deal would eventually materialise. Markets have since blown past that estimate, with front-month Brent trading nearly $28 above Citi's revised forecast.4
The IEA's supply outlook adds longer-dated pressure. The agency projected annual output will decline 3.7 million barrels per day before rebounding by 7.5 million barrels per day in 2027, while warning the recovery path will be gradual and uneven. Industry experts cautioned that prices may not fall sharply even as flows recover, since depleted inventories will need to be refilled alongside returning demand.4,2
Hatzius's revised 15% recession estimate rests on the conflict staying roughly contained. "If we were to see another shock, we'd raise that again," he said during the week of 2026-09-07. With ICE Brent crude front-month already above $107 per barrel and the Fed poised to hike during the week of 2026-09-14, the margin in that estimate is thin. A sustained push back toward the $119.50 wartime peak would force Goldman Sachs — and the Fed — to revisit assumptions that six months of resilience have so far earned.5