Where will oil prices go after the Hormuz reopening deal? Goldman Sachs sees Brent at $80

Oil prices are likely to ease over the coming quarters following the expected reopening of the Strait of Hormuz, with Goldman Sachs cutting its forecasts on expectations that Persian Gulf exports will recover faster than previously anticipated.

In a note released on June 15, the Wall Street bank lowered its Brent crude forecast for the fourth quarter of 2026 to $80 a barrel from $90 earlier. It also reduced its average Brent price estimate for 2027 to $75 a barrel. The revisions follow US President Donald Trump's announcement of an interim agreement aimed at reopening the strategically important shipping route and restoring normal oil flows from the Gulf.

The Strait of Hormuz handles roughly one-fifth of global oil trade, making it one of the world's most important energy chokepoints. Any disruption to shipping through the narrow passage can trigger sharp price spikes and supply shortages.

Oil exports

Goldman now expects exports from Persian Gulf producers to return to pre-conflict levels by the end of July, one month earlier than previously assumed, while production is expected to normalise by October.

The bank also lowered its outlook for West Texas Intermediate (WTI) crude, forecasting prices of $75 per barrel in the fourth quarter of 2026 and an average of $70 in 2027.

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Despite the more benign outlook, Goldman said risks remain two-sided. Stronger-than-expected output increases from Saudi Arabia and the UAE, along with possible sanctions relief for Iran, could add further supply and put downward pressure on prices. In its downside scenario, Brent could average just below $60 a barrel in 2027.

At the same time, the bank warned that renewed hostilities, attacks on ships or delays in clearing mines in the Strait of Hormuz could once again disrupt exports. In a bullish scenario where disruptions persist through 2027, Brent could rise above $130 a barrel and average around $105 next year.

Global oil demand

At the same time, geopolitical risks continue to loom large. Goldman warned that renewed hostilities, attacks on vessels or delays in clearing mines in the Strait of Hormuz could once again disrupt exports. In an extreme scenario where shipping disruptions persist through 2027, Brent crude could surge above $130 a barrel and average around $105 for the year.

Even with a projected global oil surplus of 3.2 million barrels per day in 2027, Goldman expects prices to remain relatively resilient. Strategic stockpiling by governments and continued low commercial inventories are likely to prevent a sharp build-up in global crude stocks.

Lower oil prices would be particularly beneficial for major importers such as India, helping ease inflationary pressures and reduce the country's energy import bill.

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What happens to India

For India, lower oil prices would provide significant relief. According to Petroleum Planning and Analysis Cell (PPAC) data, the country imports more than 88% of the crude oil it consumes, making global oil prices one of the most important variables for the economy.

Rating agency ICRA estimates that every $10-per-barrel increase in average crude prices raises India's net oil import bill by $13-14 billion and widens the current account deficit by around 0.3% of GDP. A sustained decline in crude prices would therefore help ease inflationary pressures and support economic growth.

The possibility of increased Iranian exports is also being closely watched. Manish Vaid, Junior Fellow at the Observer Research Foundation, said any increase in Iranian oil shipments could help ease global supply concerns and moderate prices, benefiting India's import bill. However, he cautioned that the extent of the benefit would depend on how the agreement is implemented and whether sanctions-related uncertainties are addressed.

Before US sanctions were tightened in 2018, Iran accounted for roughly 10-11.5% of India's crude imports. Additional Iranian barrels could intensify competition among exporters such as Saudi Arabia, Iraq and Russia, potentially helping Asian buyers secure better pricing.

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