Goldman Sachs' "bullish against the market" logic: The Strait of Hormuz will resume circulation in five days, 70% in two weeks, and 100% in four weeks

# Ye Zhen

Source: Wallstreetcn

Amid turmoil in the Middle East, Goldman Sachs is bucking the trend with a bullish outlook. Its strategy team argues that strong economic and corporate fundamentals make the recent market pullback a buying opportunity, underpinned by optimism that traffic through the Strait of Hormuz will resume in the short term. Daan Struyven, Goldman Sachs’ chief oil strategist, forecasts that crude oil shipments through the Strait of Hormuz will remain at current extremely low levels for the next five days, then recover to 70% of normal volumes within two weeks, and fully normalize to 100% after four weeks.

As global markets roil, Goldman Sachs is taking a contrarian bullish stance, viewing the recent market correction as a buying opportunity rather than the start of a prolonged bear market—driven by the firm’s optimistic projection of a “four-week recovery” for traffic through the Strait of Hormuz.

As previously reported by Wallstreetcn, Goldman Sachs’ strategy team, led by Peter Oppenheimer, wrote in a Wednesday report that while risk assets face “significant headwinds” from concerns over the Middle East conflict and disruptive impacts of AI, resilient economic fundamentals and robust corporate earnings growth will limit both the depth and duration of the pullback.

Goldman Sachs’ optimism about global markets rests heavily on expectations of a rapid repair to energy supply chains.

Daan Struyven, Goldman Sachs’ chief oil strategist, predicts that disrupted crude oil shipments through the Strait of Hormuz will stay at current extremely low levels for the next five days, then rebound to 70% of normal volumes within two weeks, and reach full normalization at 100% after four weeks.

## Strait Traffic Recovery Path and Storage Pressures

Goldman Sachs has laid out a specific timeline for the Strait of Hormuz’s traffic recovery. The bank assumes oil exports through the strait will remain at current levels (approximately 15% of normal) for an additional five days, then gradually recover to 70% over the following two weeks, and reach 100% in the subsequent two weeks.

Against the backdrop of export disruptions, Middle Eastern oil producers face severe storage constraints. Goldman Sachs estimates that Saudi Arabia, the UAE, Iraq, Kuwait, Qatar, and Iran have combined onshore crude oil storage capacity of roughly 600 million barrels, with idle capacity just over 300 million barrels before the disruption began. In a full shutdown scenario, this idle capacity could only hold about 23 days of “trapped” crude oil.

The report emphasizes that even if strait exports fall by just 85%, substantial production cuts will occur before the 23-day threshold is reached. As crude inventories approach storage limits, production will be forced to decline gradually. Countries with smaller storage buffers, such as Iraq, will face system congestion earlier and be the first to cut output.

## Supply-Demand Expectations Drive Higher Q2 Oil Prices

Several investment banks that previously held bearish views on oil prices due to “structural oversupply” have recently raised their price targets in quick succession. Daan Struyven also noted in his latest report that the market is digesting mixed signals: while the potential gradual recovery of strait traffic offers some relief, mounting evidence of production cuts has reignited concerns.

Based on these assessments, Goldman Sachs raised its second-quarter 2026 average Brent crude price forecast by $10 to $76 per barrel, and its WTI crude forecast by $9 to $71 per barrel.

The report cites two primary reasons for the upward revisions: first, strait export disruptions will cause a sharp drop in OECD commercial inventories and an estimated 2 million barrel reduction in Middle Eastern crude oil production in March; second, lingering geopolitical uncertainty will continue to support risk premiums.

## Long-Term Price Reversion and Two-Way Risks

While oil prices receive strong near-term support, Goldman Sachs has made relatively modest adjustments to its long-term price forecasts.

The bank raised its Q4 2026 Brent crude forecast from $60 to $66 per barrel, and its 2027 forecast from $65 to $70 per barrel. Goldman Sachs expects the market to return to a state of oversupply as disruption effects fade, with Brent spot prices falling from current levels of $82 to $66 per barrel by Q4 2026. This decline reflects the gradual erosion of a $13 risk premium and a $3 drop in fair value.

Goldman Sachs warns that risks to its current price forecasts remain significantly tilted to the upside. For example, if traffic through the Strait of Hormuz stays low for an additional five weeks, Brent prices could hit $100 per barrel, triggering massive demand destruction to prevent inventories from falling to critical levels.

However, downside risks cannot be ignored. Market analysts note that if Trump’s escort plan or multilateral diplomatic efforts succeed in accelerating strait traffic recovery beyond expectations, current risk premiums will evaporate rapidly. Once vessel traffic resumes, Brent prices could face a sharp plunge of $12 to $15 per barrel.

## Risk Warning and Disclaimer

The market is subject to risks, and investment requires caution. This article does not constitute personal investment advice, nor does it take into account the specific investment objectives, financial situations, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article fit their specific circumstances. Investment based on this article is at your own risk.