Goldman Sachs Names It: The Hormuz Blockade Is Now the Largest Oil Supply Shock in History

On Sunday, Goldman Sachs made it official. In a note to clients published over the weekend, the bank's commodity analysts — led by Daan Struyven — raised their 2026 Brent crude forecast to $85 a barrel from $77 and upgraded West Texas Intermediate to $79 from $72. The language they used to justify the revision was striking: the Strait of Hormuz disruption has become "the largest-ever supply shock for the global crude market."

That is not a phrase Goldman Sachs uses lightly.

What Largest-Ever Actually Means

Goldman's analysts estimate that supply losses from the Iran war could peak at approximately 17 million barrels per day — a figure that eclipses every prior energy crisis in modern history. For context: the 1973 Arab oil embargo removed roughly 5 million barrels per day from global markets. The 1979 Iranian Revolution disrupted 5.6 million bpd. The Gulf War in 1990-1991 saw up to 4.3 million bpd go offline. The Russia-Ukraine war's energy fallout, while severe for European gas markets, removed at most 2–3 million barrels per day of oil equivalent from global supply chains.

Seventeen million barrels per day, if realized, would represent roughly 17% of total global oil consumption — a shock without precedent.

Goldman's base case, however, is more measured. The bank assumes that Hormuz flows will remain at approximately 5% of normal levels through April 10 — essentially a near-complete blockade during that period — before gradually recovering over the following month. Under this scenario, Brent averages $85 for the full year, with significant volatility around the mean.

The Physical Markets Picture

In practice, the disruption has been most acute in Asia, which typically receives the bulk of Hormuz-linked crude. Gulf exporters — Saudi Arabia, the UAE, Iraq, and Kuwait — collectively ship around 17–18 million barrels per day through the strait under normal conditions, with roughly two-thirds destined for Asian buyers including China, India, Japan, South Korea, and Southeast Asian nations.

With Hormuz effectively closed, Asian refiners have been scrambling for alternative supplies: West African crude, North Sea blends, U.S. WTI — all typically more expensive for Asian buyers due to longer transit distances and different pricing benchmarks. This is driving a significant premium for Brent over WTI, as U.S. crude remains relatively available domestically while Brent-linked grades tighten globally.

Barclays, in a separate analysis this week, warned that a prolonged Hormuz blockage could wipe out 14 million barrels per day of effective oil supply. The bank noted that while Saudi Arabia and the UAE maintain pipeline bypass capacity — the East-West Pipeline and Abu Dhabi Crude Oil Pipeline — these routes can together handle only around 5–6 million bpd, leaving a structural gap of 8–12 million bpd with no immediate solution.

The Three Pipelines That Cannot Save the World

Three pipeline routes have been floated as potential lifelines if Hormuz remains closed: Saudi Arabia's East-West Pipeline to the Red Sea, the UAE's Abu Dhabi Crude Oil Pipeline to Fujairah on the Gulf of Oman, and Iraq's largely dormant Kirkuk-Ceyhan pipeline to Turkey. In theory, their combined capacity could partially offset the lost strait traffic.

In practice, the numbers are insufficient. Saudi Arabia's East-West pipeline operates at roughly 2.5 million bpd capacity. The UAE's pipeline handles around 1.5 million bpd. The Iraq-Turkey line, damaged in earlier years and only partially operational, adds at most 300,000–500,000 bpd. Total bypass capacity: under 5 million bpd against a 17 million bpd strait. The arithmetic does not work.

Goldman's note acknowledged that markets may have been slow to price the full severity of the disruption's duration. "The initial view was that this shock would be brief," one analyst familiar with the note said. "The revision reflects a reassessment of how long the physical disruption will persist."

OPEC+ in a Bind

OPEC+ finds itself in an awkward position. The group — which includes Russia, Saudi Arabia, the UAE, and a coalition of other producers — technically has spare production capacity of around 5–6 million bpd that could be brought online over weeks to months. But the majority of that spare capacity belongs to Saudi Arabia and the UAE, whose exports are themselves constrained by Hormuz.

Russia, meanwhile, faces its own export challenges due to Western sanctions and has limited ability to redirect additional barrels to Asian buyers quickly. Goldman noted that the effective spare capacity available to offset the Hormuz disruption is "substantially less" than the headline OPEC+ spare capacity figure suggests.

Trump's executive order last week easing oil sanctions on both Russia and Iran — a move that drew bipartisan backlash in Congress — was partly aimed at increasing global supply. But analysts widely noted that Iranian crude cannot be meaningfully exported through Hormuz while Iran itself controls the strait's access, and Russian capacity to ramp production quickly is limited.

What $85 Brent Means for Asia

Goldman's $85 full-year Brent average implies sustained pain for oil-importing Asian economies. Indonesia, which imports over half of its petroleum consumption, faces a mounting import bill that is widening its current account deficit and putting downward pressure on the rupiah. India, the world's third-largest oil importer, is running elevated fuel subsidy costs that are testing its fiscal discipline. Japan and South Korea, which import virtually all of their crude, are seeing energy costs feed directly into producer price inflation.

The IHSG, Indonesia's benchmark stock index, has already fallen sharply from its 2025 highs, weighed down by the combination of rupiah depreciation, foreign capital outflows, and mounting concerns about Pertamina's fuel subsidy exposure. Goldman's revised forecast — implying that high oil prices are structural, not transitory — removes the "this resolves in a few weeks" scenario that some Indonesian investors had clung to.

The Upside Risk Scenarios

Goldman outlined two tail scenarios that could push prices well above even the revised $85 forecast. In the first, a prolonged Hormuz blockage pushes Brent beyond its 2008 all-time peak of around $147 per barrel. In the second, a sustained 2 million bpd supply loss from Middle Eastern production — beyond the Hormuz disruption itself — triggers a structural repricing of global energy that lasts years, not months.

Against these scenarios, Goldman also noted a downside path: a rapid ceasefire or diplomatic resolution to the Iran conflict could quickly deflate the war risk premium embedded in oil prices, potentially sending Brent back below $80 within weeks. Trump's repeated diplomatic feints — a 15-point peace plan sent to Iran, multiple deadline extensions on threatened strikes against Iranian power plants — have created exactly this kind of volatility, with oil swinging 5–10% on individual headlines.

For now, Goldman's call stands: this is the largest supply shock in history, and markets are still in the process of fully pricing it.

The final number, for a world that has not had to absorb a disruption of this scale before, may take months to emerge.