Brent crude could climb as high as $110 per barrel if Iran blocks the Strait of Hormuz, according to a new report by Goldman Sachs.
The investment bank projects this scenario could unfold if oil shipments through the critical waterway are halved for a month and remain 10 percent below average for nearly a year.
While Goldman notes that this is a specific and less likely outcome, the bank believes some level of disruption to oil flows in the Middle East is increasingly probable.
In this scenario, Brent prices are expected to spike initially before stabilising at around $95 per barrel in the final quarter of 2025, the analysts said, as reported by Reuters.
This marks a significant revision from the bank’s forecast just a week earlier, when it anticipated a geopolitical risk premium of about $10 per barrel, with prices potentially exceeding $90 if Iranian crude supply were disrupted.
Citing data from the prediction platform, Polymarket, Goldman estimates a 52 percent probability of Iran closing the Strait of Hormuz.
In contrast, the chance of the United States formally declaring war on Iran before the end of the month remains low at just 2 percent, according to the same platform.
Oil markets responded modestly to the latest developments, with Brent crude trading above $78 per barrel and West Texas Intermediate (WTI) at $75.24 at the time of writing.
“A spike in oil prices is anticipated. Even without immediate retaliation, markets are likely to factor in a heightened geopolitical risk premium,” said Jorge Leon, head of geopolitical analysis at Rystad Energy.
Giovanni Staunovo, an analyst at UBS, added, “The direction of oil prices will now depend on whether supply disruptions materialise, which would push prices higher, or if tensions ease, causing the risk premium to decline.”
BusinessDay reported that for Nigeria, the continued rally in crude prices offers a welcome boost to foreign exchange (FX) inflows and fiscal revenues.
Analysts also noted that this could help ease short-term pressure on the naira, which has lost some value recently despite the introduction of a more flexible exchange rate regime earlier this year.
