Goldman Sachs has maintained its oil price projections while highlighting significantly increased two-way risks, prompting investors to reassess their investment rationale.

According to reports on April 17, the Goldman Sachs team led by Daan Struyven issued a new crude oil market analysis. Against the backdrop of crude prices falling sharply due to news of the Strait of Hormuz "reopening," Goldman maintained its full-year 2026 average price forecasts for Brent crude at $83 per barrel and WTI crude at $78 per barrel.

The team's previous report had anticipated that Persian Gulf crude exports would return to pre-conflict levels within approximately one month. The news on Friday regarding the Strait of Hormuz "reopening" triggered large-scale algorithmic unwinding of long crude positions.

The WTI crude futures price fell over 11% in a single day, retreating to its lowest level since March 10.

The latest report emphasizes that, from a quarterly distribution perspective, the peak is projected for the second quarter of 2026, with Brent expected to average $90 per barrel and WTI $87 per barrel, followed by a sequential decline each quarter, with Brent falling to $80 per barrel in the fourth quarter.

The analysis maintains its core assumption that "Persian Gulf oil flows will gradually normalize by mid-May." However, the risk structure, previously characterized by Goldman as having a "significant net upside," has now rebalanced towards "two-way risks."

In other words, oil prices face the possibility of a sharp surge due to prolonged flow disruptions, but also significant downward pressure from weaker-than-expected demand or rapid progress in peace negotiations.

This implies that the logic of a straightforward long position on crude oil needs re-evaluation, while the value of hedging instruments like options is rising.

Risk premiums are expected to fade quickly, and actual supply disruptions are lower than previously anticipated.

The report notes that if Middle East peace talks achieve substantive progress, the geopolitical risk premium currently embedded in oil prices would face pressure to normalize rapidly, constituting a significant near-term downside risk to the price forecast. The sharp drop in crude futures on April 17 confirms the real-world impact of this logic.

Secondly, on the supply side, Goldman Sachs has revised downward its estimate of crude supply disruptions in the Persian Gulf for March.

Goldman now estimates that average daily crude supply disruptions in the Persian Gulf region in March amounted to 8.0 million barrels per day, lower than its mid-March projection of 9.7 million barrels per day.

By country distribution, the current estimates are approximately: Iran 0.5 million bpd, Iraq 3.0 million bpd, Kuwait 0.8 million bpd, Qatar 0.3 million bpd, Saudi Arabia 2.1 million bpd, and the UAE 1.3 million bpd.

Goldman believes that higher-than-expected storage capacity in the Middle East is a key reason why actual disruptions were lower than anticipated.

This means that even if disruptions to Hormuz flows persist, their actual impact on global supply could be milder than initially thought, creating potential downward pressure on medium-term price forecasts.

Demand is proving more fragile than expected.

Market attention is shifting from geopolitics to economic fundamentals. Preliminary data indicates that oil demand, particularly the most price-sensitive segments, is declining rapidly.

Goldman points out that demand weakness is concentrated in two main areas: jet fuel and petrochemical feedstocks (such as naphtha and LPG).

Air travel exhibits consumption elasticity, meaning people reduce flying when oil prices are high; petrochemical feedstock demand is directly profit-driven, leading companies to cut production when product prices cannot cover high feedstock costs.

Why is the demand response so pronounced this time? Goldman provides three specific reasons.

First, the pain felt by end-consumers is amplified.

Currently, global refining margins (the spread between refined product prices and crude oil) are at very high levels. This means that even if crude oil prices themselves haven't surpassed historical peaks, the prices of gasoline and diesel at the pump, and chemical feedstocks for factories, have risen more sharply.

Goldman calculates that with Brent around $100 per barrel, if refining margins remain at current highs, a $10 increase in refined product prices would lead to a global oil demand reduction of approximately 0.9 million bpd after 1-2 quarters. This figure is significantly higher than the 0.6 million bpd reduction seen when refining margins are at average levels.

Second, supply tightness and price pressures are precisely hitting the most vulnerable demand segments and regions.

Beyond jet fuel and petrochemical feedstocks, more price-sensitive regions like emerging Asia and Africa are bearing a greater impact.

Third, signs of rationing and shortage are emerging in some markets.

In countries with price controls, governments manage retail fuel prices through fiscal subsidies, state-owned enterprises compressing profit margins, and restricting product exports.

When crude prices exceed $80 per barrel, state-owned enterprises must compress their profit margins. However, this control model itself introduces risks of supply shortages and rationing.

Upside risks: Supply disruptions could last longer than expected.

Despite the clear increase in downside risks, Goldman also emphasizes that significant upside risks for oil prices remain, stemming primarily from two scenarios:

First, the low-flow situation in the Strait of Hormuz persists longer than expected. The current 92% flow deficit means supply pressure accumulates with each day of stalemate; if peace talks fail or the situation escalates, oil prices would face sharp upward pressure.

Second, permanent damage to crude oil and refined product production capacity. Potential war-related damage to Middle Eastern refineries and oil field infrastructure could make the recovery of production capacity take far longer than the market expects.

Integrating Goldman's analytical framework, the core change for investors in crude oil and related assets is that the risk structure has shifted from a previous "significant net upside" to a genuine two-way game.

In this context, the risk-reward profile of a simple long position in crude has clearly weakened. Volatility strategies, such as going long crude option implied volatility, and cross-commodity spread trades, like crude vs. refined product crack spreads, may be better suited to capturing the current market's structural characteristics.