As the situation in the Middle East remains volatile, Goldman Sachs has taken a contrarian bullish stance. Their strategy team believes that the recent market pullback represents a buying opportunity, as strong economic and corporate fundamentals mean that the decline will likely be temporary. This view is underpinned by optimism that the flow of oil through the Strait of Hormuz will be restored in the short term. Goldman’s chief oil strategist, Daan Struyven, expects crude shipments through the Strait of Hormuz to stay at their current extremely low levels for the next five days, afterward recovering to 70% of normal volumes within two weeks, and reaching 100% full normalization in four weeks.

Amid global market turmoil, Goldman Sachs is bullish, arguing the current pullback is a buying opportunity rather than the start of a prolonged bear market, largely due to its optimistic forecast for the “four-week recovery” of traffic through the Strait of Hormuz.

In a report released on Wednesday, led by Peter Oppenheimer, Goldman’s strategy team wrote that despite “significant headwinds” from the war in the Middle East and concerns around disruptive impacts of AI, resilient economic fundamentals and robust corporate earnings growth will limit both the depth and duration of the current correction.

Goldman’s optimism regarding global markets is largely built upon expectations that the energy supply chain will rapidly heal.

Daan Struyven, Goldman’s chief oil strategist, expects that crude oil flows through the Strait of Hormuz—which have been disrupted—will remain at current extremely low levels for the next five days, then gradually recover to 70% of normal over the following two weeks, and achieve full normalization (100%) in four weeks.

Path of Flow Restoration and Storage Pressures

Goldman has laid out a specific timetable for the recovery of flows through the Strait of Hormuz. The bank assumes that crude oil exports through the strait will remain at about 15% of normal levels for an additional five days, then gradually rebound to 70% over the next two weeks, and reach 100% in the subsequent two weeks.

With exports hindered, Middle East oil producers face severe storage pressures. Goldman estimates that Saudi Arabia, the UAE, Iraq, Kuwait, Qatar, and Iran together have around 600 million barrels of onshore oil storage, while the idle capacity before the disruption was only marginally above 300 million barrels. If the strait were completely closed, this spare capacity could accommodate “stranded” crude oil for only about 23 days.

The report underscores that even with an 85% reduction in exports via the strait, significant production cuts would occur before the 23-day storage limit is reached. As crude inventories approach storage capacity, production would have to be gradually reduced, especially for countries with smaller storage buffers like Iraq, which would face systemic congestion and be forced to cut output sooner.

Supply-Demand Expectations Push Q2 Oil Prices Higher

Many investment banks that were previously bearish on oil prices due to “structural oversupply” have recently raised their targets. In his latest report, Daan Struyven notes that the market is digesting mixed signals—the potential gradual recovery of strait flows brings some relief, but mounting evidence of production cuts is resurfacing concerns.

Based on these factors, Goldman Sachs has raised its average Q2 Brent crude price forecast by $10 to $76 per barrel, and its WTI forecast by $9 to $71 per barrel.

The report points to two main reasons for the upward revision: first, curtailed exports via the strait will cause a sharp drop in OECD commercial inventories, with Middle East crude output estimated to be cut by 200 million barrels in March; and second, persistent geopolitical uncertainties will continue to support a risk premium.

Long-Term Price Normalization and Two-Way Risks

Though oil prices are strongly supported in the short term, Goldman’s revisions for forward prices are comparatively modest.

The bank raised its Q4 2026 Brent forecast from $60 to $66 per barrel and its 2027 forecast from $65 to $70. Goldman expects the market to return to an oversupplied condition as disruption effects fade, with Brent spot prices falling from the current $82 to $66 by Q4 2026. This retreat reflects both the gradual evaporation of a $13 risk premium and a $3 drop in fair value.

Goldman notes that risks to its price forecasts remain skewed to the upside. For example, if flows through the Strait of Hormuz remain low for an additional five weeks, Brent prices could reach $100, relying on major demand destruction to prevent inventories from reaching critical lows.

However, downside risks cannot be ignored. Market analysts point out that if Trump’s proposed naval escort program or intensified diplomatic efforts succeed, resulting in a speedier than expected recovery of flows through the strait, the current risk premium could quickly dissipate. Once vessel transit through the strait resumes, Brent could plunge by $12 to $15 per barrel.