"This Round Spot-On" Goldman Sachs: Maintains Its Forecast of "Restoration of Middle East Oil Flows by Mid-May", Keeps Oil Price Target Unchanged but Highlights Increased "Two-Way Risks"

The sharp drop in crude oil futures on April 17 validated the real-world impact of this logic. Second, on the supply side, Goldman Sachs revised downward its estimate of Persian Gulf crude oil output cuts for March. Goldman Sachs currently estimates that average daily crude oil production cuts in the Persian Gulf region in March stood at 8 million barrels per day—lower than its mid-March forecast of 9.7 million barrels per day. By country, the current estimate shows Iran cutting approximately 500,000 barrels per day, Iraq around 3 million barrels per day, Kuwait about 800,000 barrels per day, Qatar roughly 300,000 barrels per day, Saudi Arabia about 2.1 million barrels per day, and the UAE approximately 1.3 million barrels per day. Goldman Sachs believes that regional storage capacity in the Middle East is higher than previously anticipated—a key reason why actual production cuts have fallen short of expectations. This implies that even if the Strait of Hormuz flow remains disrupted, the actual impact on global supply may be milder than expected—constituting a potential downside pressure on medium-term oil price forecasts. Demand Is More Fragile Than Anticipated Market attention is shifting from geopolitics to economic fundamentals. Preliminary data indicate that oil demand—especially the most price-sensitive segments—is declining rapidly. Goldman Sachs points out that demand weakness is concentrated in two areas: jet fuel and petrochemical feedstocks (e.g., naphtha, liquefied petroleum gas). Air travel is consumption-elastic: people fly less when fuel prices rise; meanwhile, petrochemical firms’ feedstock demand is directly profit-driven—when product prices fail to cover high raw-material costs, they cut production. Why is demand responding so sharply this time? Goldman Sachs cites three specific reasons. First, end-consumer pain is amplified. Currently, global refining margins (i.e., the spread between refined products and crude oil) are at extremely high levels. This means that although crude oil prices themselves may not have breached historical peaks, retail gasoline and diesel prices—and industrial procurement prices for chemical feedstocks—are rising more steeply. Goldman Sachs calculates that when Brent crude trades near $100 per barrel, if refining margins remain at current highs, every $10-per-barrel increase in refined product prices will reduce global oil demand by approximately 900,000 barrels per day within one to two quarters—a figure far exceeding the 600,000 barrels per day reduction observed when refining margins are at average levels. Second, supply tightness and pricing pressures are hitting the most vulnerable demand segments and regions. Beyond jet fuel and petrochemical feedstocks, emerging-market regions—including Asia and Africa—that are especially price-sensitive are bearing greater strain. Third, signs of rationing and shortages are appearing in some markets. In countries with price controls, governments employ multiple measures—including fiscal subsidies, margin compression at state-owned enterprises, and restrictions on product exports—to manage retail fuel prices. When crude oil prices exceed $80 per barrel, state-owned enterprises must absorb margin compression themselves. Yet this control model itself introduces supply shortages and rationing risks. Upside Risk: Supply Disruptions May Last Longer Than Expected

Wall Street’s "Full Pivot"! Multiple Investment Banks Warn of a "Long-Term Energy Crisis Triggered by an Iran War"

U.S. blockades of the Strait of Hormuz and airstrikes against Iran’s Kharg Island oil export hub are pushing global energy markets toward the most severe supply crisis in decades. Major Wall Street institutions—including JPMorgan, Goldman Sachs, and RBC Capital Markets—collectively issued warnings this week, forecasting that the supply shortfall will widen sharply over the coming days and that oil prices face further substantial upside risk. Meanwhile, shortages of refined products—including diesel and jet fuel—are beginning to spill over into the real economy, sending energy prices surging across Asia, Europe, and North America. Since the U.S. launched military action, Brent crude has surged roughly 40%, breaking above the $100-per-barrel threshold. According to Xinhua News Agency, U.S. President Donald Trump posted on social media on the evening of the 13th, stating that U.S. forces had launched “intense airstrikes” against military targets on Kharg Island—the linchpin of Iran’s oil exports. He also warned that if Iran impedes any vessel’s passage through the Strait of Hormuz, the U.S. would destroy the island’s oil infrastructure. Iran’s newly appointed Supreme Leader, Mojtaba Khamenei, delivered a tough response on Thursday, declaring Iran would continue blocking the Strait and warning the world to prepare for $200-per-barrel oil. Latest reports indicate that, according to Iranian media cited by Xinhua on the 14th, Major General Mohsen Rezaei of the Islamic Revolutionary Guard Corps stated Iran would consider ending the war only under two conditions: first, full compensation for all Iranian losses; second, the complete withdrawal of U.S. forces from the Persian Gulf. Supply Shortfall Widens Rapidly; Refined-Product Shortages Spread into the Real Economy JPMorgan analyst Natasha Kaneva noted in her research report that crude supply cuts are expected to approach 12 million barrels per day by next weekend—“a gap highly visible in the physical market.” She also warned that markets now face severe shortages of diesel, jet fuel, liquefied petroleum gas, and naphtha—“products that simply cannot be consumed because they do not exist.” Goldman Sachs estimates that oil flows through the Strait of Hormuz have plummeted from a normal level of over 19 million barrels per day to roughly 600,000 barrels per day—less than a fraction of total U.S. oil production. This narrow waterway typically carries about one-fifth of the world’s oil and liquefied natural gas supply. U.S. retail gasoline prices rose to $3.63 per gallon on Friday—marking the 13th consecutive day of increases—and are approaching the psychologically critical threshold of $4 per gallon.

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Goldman Sachs shifted its trading recommendation from diesel to gasoline due to tightening global fuel markets driven by geopolitical conflicts and refinery output changes. Analysts cite resilient demand and stockpile shifts as key factors for gasoline's potential price upside compared to record-high diesel prices.

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