Ask a bank where oil is heading and you'd normally expect one number. Ask Goldman Sachs right now and you get three. $85 a barrel is the new base case for Brent this December, revised up $5 in the past month, with the bank seeing $80 through 2027. But its own scenarios stretch much wider: Brent could move above $120 if Gulf production remains materially below pre-war levels, or fall into the $60s if supply recovers.
That's roughly a $55-per-barrel spread on one commodity, from one desk.
So the entire oil market has effectively become one bet: does Hormuz reopen, or doesn't it?
The interesting thing is that most of the major forecasts are still leaning towards the lower end. That suggests there may be more oil around than the headlines are telling us.
OPEC+ has spent 2026 quietly adding supply back into the market and has just agreed a new mechanism for setting future output baselines. That points towards a group preparing to pump more, rather than less.
JPMorgan's numbers tell a similar story. It sees Brent averaging around $86 in Q3, $80 in Q4 and $78 by year-end. The EIA is around $90 for the second half of the year.
None of these forecasts assume a war-free environment. The Iran conflict is priced into the numbers. The banks simply don't believe the disruption permanently changes underlying supply.
But the options market tells a different story, or at least it is hedging harder than the point forecasts suggest.
The probability of Brent trading above $100 by March 2027, as implied by options, has jumped from around 6% a month ago to roughly 25% now. Goldman's headline forecast has moved much less.
The forecast is calm. The positioning underneath isn't.
Then there is Aramco, which reportedly told customers that it can restore around half of the East-West pipeline's capacity within days and return to full flow within six weeks. The US Energy Secretary went further on the day of the strike, describing the disruption as a "brief interruption".
So far, the market has treated the damage as an inconvenience rather than a catastrophe.
Goldman's own inventory analysis helps explain why. OECD commercial inventories have barely drawn since the war began, with the deficit smaller than expected and stock reductions concentrated in strategic reserves, oil on water and China. Goldman also expects Middle East supply to gradually recover as additional pipelines come back online.
That matters because tight inventories do not automatically mean an imminent price spike. Brent traded at just $76 a barrel when global visible inventories reached their lowest recorded level in November 2024.
The reason the upside scenario exists isn't necessarily because anyone expects Hormuz to remain closed forever. It is because the market has to consider what happens if disruption continues. Goldman's own trigger for Brent above $120 is more attacks on shipping through the Persian Gulf and Red Sea, rather than simply a formal declaration that Hormuz is closed.
The physical market is showing signs of strain. Reuters reported last week that the East-West pipeline shutdown following drone attacks had disrupted Saudi shipments to Europe, while Brent approached $108 and some physical European cargoes traded above $120.
Then there are the Houthis. Their reported missile strike on Riyadh this weekend, alongside their claimed strike on Yanbu, the port at which the East-West pipeline terminates, adds another layer of risk.
That matters because Aramco's six-week repair estimate is an engineering estimate. It assumes the infrastructure remains intact while the repairs are carried out.
That's the real risk to the oil market.
Not necessarily that Hormuz remains closed because of one grand political decision, but that disruption continues through attrition: one drone, one missile and one infrastructure strike at a time, until "temporary" disruption stops being temporary.
Every ceasefire this year has failed. At the same time, physical disruptions have repeatedly been repaired faster than the initial headlines suggested. The pipeline is the latest example.
That is why the next few weeks could be particularly important.
For me, the market to watch most closely is diesel. The damage is already being felt, and OPEC+ has limited ability to solve a refined-product bottleneck simply by turning up crude production.
Goldman's preferred hedge for this risk isn't crude at all. The bank has pointed towards deferred 2027 European diesel timespreads, which could benefit disproportionately if refinery outages in Russia or the Middle East persist.
That distinction is important. The next oil shock may not necessarily show up first in the headline crude price. It could show up in the products market.
If the repair schedule holds, Brent should drift back towards $90 over the coming weeks.
The bigger risk isn't necessarily another policy decision in Washington, Tehran or Riyadh.
It's another strike.
A fresh attack could reset the repair clock, undermine confidence and force the market to reprice the probability of prolonged disruption. The oil market is not really betting on peace. It's betting that Aramco's engineers can repair the infrastructure faster than Iran's proxies can break it.
Right now, the fixers are winning.
But every fresh attack damages confidence and reduces the odds that they stay ahead.
My own view is that by the end of Q1 2027, oil will be closer to $80 than $120.
That doesn't mean we won't see significant turbulence along the way. I can easily see another bout of disruption sending oil above $120 a barrel before the underlying supply picture reasserts itself.
The question isn't whether oil can spike above $120. It's whether the physical disruption can persist long enough to keep it there.
Time will tell.
GLA and DYOR.
The week ahead
UK corporate calendar
Tuesday 22 Sep: Kainos Group (KNOS) AGM; Kingfisher (KGF) interim results.
Wednesday 23 Sep: Baltic Classifieds Group (BCG) AGM; Renishaw (RSW) final results; JD Sports (JD.) interim results.
Thursday 24 Sep: AO World (AO.) AGM; Biopharma Credit (BPCR) interim results; Raspberry Pi (RPI) interim results.
Macro & data calendar
Monday: Chicago Fed National Activity Index for August. Also watch whether Aramco delivers the promised partial pipeline restart "within days".
Tuesday: Richmond Fed manufacturing data, followed by API weekly crude inventory data after the close. This should provide the first meaningful indication of whether US inventories are absorbing the Saudi shortfall.
Wednesday: The EIA's weekly petroleum status report, plus flash September PMIs for the US, UK and eurozone — alongside Kingfisher's and Kainos's numbers.
Thursday/Friday: A wall of Fed speakers, with more than ten appearances scheduled this week. Markets will be listening closely for clues about whether last week's hike was a one-off or the beginning of something more persistent. University of Michigan consumer sentiment closes the week on Friday.
No fixed date yet: Macron's G7 energy meeting, called for "the coming weeks" but not yet scheduled. Also worth watching whether the Houthis follow up Saturday's Riyadh/Yanbu strikes while Aramco's crews remain in the middle of repairs.
Disclaimer
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