Goldman warns oil could hit $120 as Iran war drags on, clean energy pivot faces reversal
Brutal numbers from Persian Gulf supply disruption test whether the green shift has staying power.
ICE Brent crude front-month traded at $96.20/bbl on Thursday (2026-07-23), up 0.19%, as Goldman Sachs warned oil could hit $120 by year-end if the Strait of Hormuz stays effectively shut.7 [LIVE PRICES]
The war with Iran, now in its fifth month, has already triggered what the International Energy Agency called the largest supply disruption in oil market history.3 Brent spiked past $120 on March 4 (2026-03-04) after the strait was closed, then eased on ceasefire hopes — only to rally again after talks collapsed.3,6
Goldman’s commodity team said in a note that estimated flows from the Persian Gulf have fallen below 45% of pre-war levels, pushing crude back up.7 WTI Crude was at $88.53/bbl on Thursday morning (2026-07-23), up 0.51%. [LIVE PRICES]
Middle Eastern producers are still scrambling, two months after the strait was shut, to find alternative export routes.1 Before the war, around 20% of the world’s oil passed through that 50-kilometer stretch of water.1 “The $110 trillion global economy can be taken hostage by a couple of hundred men with guns across a 50-kilometer stretch of strait — it doesn’t make sense at all,” one analyst said.1
Asian buyers are the most exposed. China is rapidly expanding alternative supply channels and storage, and the disruption has forced a fundamental rethink of energy security across the region.2 The war has reshaped Asia’s energy strategies in weeks, with governments now weighing long-term contracts and domestic build-outs that would have been politically difficult before the crisis.2
The clean energy shift that was one of the war’s early outgrowths now looks vulnerable. Canary Media reported in June (2026-06-18) that the conflict had sparked a pivot toward renewables and efficiency — but the same forces are under pressure from spiking costs.4 Utility-scale solar costs have risen 18% since the war began, and coal and LNG prices have jumped, squeezing the economics of the green transition.6
European gas traders are watching the TTF premium. ICE Endex TTF front-month was at €62.63/MWh on Wednesday (2026-07-22), up 4.95% on the day, with the JKM Asian LNG benchmark at $22.00/MMBtu. [LIVE PRICES] The implied coal-to-gas switching level remains elevated, meaning any further supply tightness in LNG could push European power prices — already at €124.46/MWh — higher. [LIVE PRICES]
Goldman’s view is not uniformly bearish on crude over the medium term. The bank said the coming global race to rebuild depleted oil inventories “will not be enough to offset a massive glut that’s coming to the market next year” as traffic through the strait appears headed toward normalization.7 That is the contrarian call: a 2027 price collapse if the bottleneck opens, even if the next six months are tight.
Iran flagged on Wednesday (2026-07-15) that it might close “all other export corridors that benefit the US and its allies,” threatening the Red Sea and the Bab el-Mandeb strait.6 The Houthis have joined the fight, complicating any ceasefire path.5 Until that threat fades, Brent’s backwardation — and the premium on every barrel that does get out — will persist.
The next signal for clean energy investors is whether the current crisis-driven momentum outlasts the war itself. If the Hormuz reopening brings a 2027 oil glut, the case for renewables loses its most powerful selling point: security of supply at any price.