Episode summary
Oil Market Impacts from Iran
Exchanges (Goldman Sachs)
· · Guests: Daan Struyven
Summary
The episode argues that the main market shock from the Iran strikes is not destroyed production so much as disrupted export flows, especially through the Strait of Hormuz. Daan Struyven says the Strait normally carries about one-fifth of global oil supply, but shippers are moving into a wait-and-see mode because of reports of damaged ships and soaring insurance costs. He adds that production losses so far appear more limited, while the larger immediate issue is the interruption of crude, refined products, and LNG exports.
Struyven says Goldman Sachs keeps its base case unchanged because it assumes no sustained supply disaster. In that scenario, Brent is still expected to bottom at $60 by the end of 2026, even though the market is currently around $78. He says the market is already pricing in roughly a $13 per barrel risk premium, which implies expectations of a full Strait closure for about four weeks. He stresses that the price response is non-linear: a short disruption could be muted, but a prolonged closure could push prices into triple-digit territory.
The macro view is that sustained energy shocks would lift inflation and hit disposable income, but the broader economy starts from a healthier position than in 2022. On policy tools, he says a Strategic Petroleum Reserve release would be textbook in a larger disruption, though it is not being discussed now. He remains most constructive on gold as a hedge against geopolitical and macro shocks, and says the key variable to watch is how long the conflict lasts and whether it broadens.
Key takeaways
- Struyven says the biggest oil-market impact is the sharp drop in export flows through the Strait of Hormuz, not yet a broad collapse in production.
- Goldman Sachs keeps its base case for Brent at $60 by Q4 2026 because it assumes no sustained supply disruption.
- He says the market is already pricing about a $13 per barrel risk premium, equivalent to a full Strait closure for roughly four weeks.
- Struyven says a long disruption could force prices into triple-digit territory if storage runs out and demand destruction is needed to rebalance the market.
- He says gold remains Goldman Sachs Research’s highest-conviction recommendation because it hedges geopolitical and policy shocks.
- He says a Strategic Petroleum Reserve release would make sense in a sustained shock, but the current discussion is still limited.
Notable quotes
“the developments are definitely significant, especially because flows through the Strait of Hormuz, which in normal times accounts for about one-fifth of global oil supply, are down very sharply”
“our base case is that Brent, which is now currently around 78 will bottom this cycle at 60 by the end of this year in the fourth quarter”
“the impact on prices is likely non-linear a convex function of how long the supply disruption lasts”
“the market is essentially pricing an $13 per barrel risk premium, which on our model, corresponds essentially to the market pricing in a full closure of the Strait of Hormuz for around four weeks”
“Our highest conviction recommendation continues to be gold, both because of an attractive base case where this diversification from central banks into gold continues”
How the episode opens
Strikes in Iran have reignited concerns about oil supply, inflation pressure, and cross-asset volatility. How significant are these disruptions and what are the implications for the global economy? I'm Allison Nathan, and this is Goldman Sachs Exchanges.
Today I'm sitting down with my colleague in Goldman Sachs Research, Daan Struyven, Co-Head of Global Commodities Research and the Head of Oil Research. Daan, welcome back to Exchanges. Thank you, Allison.
Daan, before we turn to markets, we just want to acknowledge first the very real human cost of any escalation in the region. Our focus here today is strictly on the economic and market implications. So with that in mind, Daan, the last time we had you on this program, we were talking about Venezuela and the oil market impacts of those developments.
But clearly we have had the US and Israel launch over the weekend a military campaign against Iran. It has killed Iran's Supreme leader, Ayatollah Ali Khamenei. So how significant are these developments?
Most importantly, thinking about what is actually happening on the ground in terms of oil infrastructure and supply. Yeah, so the developments are definitely significant, especially because flows through the Strait of Hormuz, which in normal times accounts for about one-fifth of global oil supply, are down very sharply with only some Chinese ships reportedly going through the Strait. And as a result, I think the rise in oil prices, up 8% since Friday, up 25% year to date, I think that increase is appropriate in light of the rise of the geopolitical risks to energy supply.
When we think about the actual disruptions we're seeing now, are you actually getting confirmation that oil infrastructure has been disrupted in some of these other countries, either from the port side of things, fields, refineries. Talk us through it.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- iran oil market
- oil price impact
- energy prices
- commodities
- commodities research
Companies and tickers mentioned
- GS
- Goldman Sachs
Watch the episode
Watch “Oil Market Impacts from Iran” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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