Goldman Sachs: $90 Oil Is Now a Tug-of-War Between Crashing Demand and the Strait of Hormuz

Where the demand weakness is concentrated

Goldman identifies two regions driving the demand shortfall: China and Europe .

In China, refinery imports and fuel sales have dropped sharply, and April retail sales figures reinforced the picture of a consumer pullback . The demand slowdown is visible across road fuels, jet fuel, and petrochemical feedstocks — with Goldman noting lower utilization rates at Asian petrochemical plants as an additional sign of stress .

In Europe, jet fuel imports are running roughly 60% below 2025 average levels, and broad fuel consumption has disappointed relative to the bank’s already conservative estimates . Goldman’s April retail sales analysis suggests the downside risk from China and Western Europe alone could be on the order of 2 mb/d, enough to reduce its Brent price forecast by about $10 per barrel if sustained .

The demand hole is opening up even as the market remains desperately short of supply — a pairing that Goldman characterizes as a genuine “demand destruction phase,” where high product prices and scarcity are directly curtailing end-user consumption .

The supply side: a historic shock that hasn’t gone away

The Strait of Hormuz accounts for roughly 20% of global oil supply under normal conditions. As of late May, throughput had collapsed to about 5% of normal levels after the late-February US-Israeli strikes on Iran . Goldman noted that roughly two-thirds of the resulting inventory draw reflects lost supply, with the remainder attributable to precautionary stockpiling .

The production losses are staggering: roughly 14.5 mb/d of Middle East output has been offline, with the bank estimating that cumulative losses could exceed 800 million barrels under its base-case recovery path . That path now assumes a normalization of Gulf exports by the end of June, later than its previous mid-May estimate .

Goldman’s analysts, led by Daan Struyven, described the situation in a late-April note as presenting economic risks “larger than our crude base case alone suggests because of the net upside risks to oil prices, unusually high refined product prices, product shortages risks, and the unprecedented scale of the shock” .

Two-sided risk: why $90 is far from certain

The bank’s Q4 2026 base case of $90 Brent and $83 WTI is an attempt to bridge two powerful opposing forces — and Goldman is explicit that the risks run in both directions .

Downside risk: demand shortfalls grow or spread

The 4–5 mb/d demand decline already registered is a direct headwind to the price outlook. If the weakness in China and Europe deepens, or if elevated prices continue to suppress consumption for jet fuel, petrochemicals, and road fuels more broadly, prices could undershoot the $90 target. Goldman has indicated the demand erosion alone could trim about $10 off its Brent forecast .

Crucially, the bank frames this as an “expected” demand response becoming larger than modeled — actual end-use oil demand appears to have fallen more in response to higher prices than the bank’s earlier frameworks anticipated .

Upside risk: the Strait of Hormuz stays shut

Despite the demand headwinds, the supply shock remains the dominant upside threat. The Strait of Hormuz is still effectively closed to oil tanker traffic, and any further escalation or delay in reopening would add to an already severe supply deficit. Goldman’s adverse scenario — in which flows remain severely curtailed for longer — would push Q4 Brent above $100/bbl, and an extreme scenario could approach $120/bbl .

Global inventories, even under optimistic recovery assumptions, are expected to fall to their lowest levels since at least 2018 . That leaves the market with very little cushion against any additional disruption.

The bottom line: a market stuck between two extremes

Goldman Sachs’ current view is that the oil market is not facing a single crisis but two colliding ones. On one side, demand destruction is accelerating in the world’s two largest consuming regions outside North America. On the other, the Strait of Hormuz closure is imposing the most severe supply constraint in modern history. The bank’s $90 Brent forecast is essentially a bet that these two forces will offset each other — but the notes make clear that either could break the balance decisively.