Goldman Cuts Oil Forecast to $78 on Hormuz Reopening Hopes

Goldman Sachs cut its three-month Brent crude forecast to $78 a barrel late Friday. The bank told clients the Strait of Hormuz could reopen within 90 days, a timeline it said was faster than consensus had priced. The revision pulled its estimate into line with a market that had already repriced the Iran risk premium.

Crude traded near $77.72 Monday, down roughly 16% from the $92 level hit early last week. Shipping data from Vortexa and Kpler showed tanker rates for medium-range vessels out of the Middle East Gulf fell 12% on Sunday alone, the biggest single-day drop since October. The decline reflected charterers pricing in lower war-risk insurance premiums, traders said.

The bank's commodity research unit lowered its three-month estimate by about $10, according to the note reviewed by AlphaScala. A senior analyst on the call cited "measured progress" in Oman-brokered talks. Goldman also flagged the potential for a 2 million to 3 million barrel-per-day increase in Iranian exports if sanctions relief accompanies a reopening. That flow would test OPEC+ discipline in the second half, the note said.

The selloff has washed out speculative longs at the fastest pace in 18 months. ICE COT data showed managed money cut Brent net longs by 47 million barrels last week, the largest weekly reduction since the March 2023 banking crisis. "The positioning unwind is not done," a New York-based crude options trader said. "You still have a lot of open interest in the $80-$85 call strikes that hasn't migrated yet."

AlphaScala's own metrics give Goldman Sachs a score of 55 out of 100, with a "mixed" label reflecting the tug-of-war between its deep equity-research bench and its commodity division's recent forecasting misses on the downside. The GS stock page shows the bank's shares have underperformed the Financials sector by 3.2% over the past month.

The physical market is sending a different signal. North Sea crude differentials for July loading held steady despite the screen weakness. Producers have not yet added extra barrels to the prompt market, traders said. One trading desk in Geneva called the rally from $72 to $92 a "false breakout from a supply-driven build" and said the floor below $75 is weak without a real outage.

Iran's foreign ministry confirmed indirect contacts with Gulf states on Sunday but said any agreement on transit conditions was "premature." That language left room for a deal in weeks, not months, diplomatic sources in Dubai said.

For now, the options market is pricing Brent between $73 and $84 through the September expiry. The risk skew has shifted from calls to puts for the first time since March. Goldman's note positioned its team on the bear side of the forward curve and encouraged clients to sell upside volatility rather than chase the decline.

Separately, the reopening scenario has spillover effects for European gas. Dutch TTF futures closed down 4% Monday, the biggest drop in a month. The Hormuz news reduced the risk premium on LNG cargoes diverted around Africa, traders said. The crude oil below 200-day EMA trade has accelerated, with the benchmark settling below its long-term moving average for the first time since December.

The next scheduled OPEC+ meeting is June 2. The group's current production baseline already accounts for a partial Iranian return from 2025. A faster timeline would force Saudi Arabia and the UAE to decide whether to absorb the extra supply or accelerate their voluntary cuts.