70% Is the New 100%: What Goldman Sachs Sees for Oil After the Strait of Hormuz Reopens

The Strait of Hormuz is reopening. But the global oil market that emerges will not look like the one that existed before the war.

Goldman Sachs projects that crude oil flows through the chokepoint will permanently recover to only about 70% of pre-war levels — a structural shift the bank titled "70% of Pre-War Hormuz Flows Might Become the New 100%" in a June 17 note . This is not a temporary disruption. Regional producers have invested heavily in bypass infrastructure during the conflict and are unlikely to fully revert to pre-war shipping patterns . The normalization of total Gulf exports to pre-war levels can still be achieved, but a much larger share will travel via non-Hormuz routes, requiring a roughly 13-million-barrel-per-day increase in overall regional flows to compensate for the permanent chokepoint reduction .

The bypass infrastructure now moving ~7.5 million bpd

The war forced producers to rapidly scale up three main bypass routes, which collectively are now moving approximately 7.5 million barrels per day:

• Saudi Arabia (Yanbu): Saudi Aramco pushed its East-West Pipeline (Petroline) to an all-time record throughput of 7 million bpd in Q1 2026 . However, port loading at Yanbu terminals is the effective bottleneck — actual crude exports via Yanbu have run at roughly 4 million bpd (quadruple pre-war levels), with the balance used for domestic refineries . The pipeline's 1,200-kilometer route from Abqaiq to the Red Sea coast bypasses Hormuz entirely .

• UAE (Fujairah): The Habshan-Fujairah (ADCOP) pipeline delivers crude to Fujairah Port on the UAE's west coast, outside the Strait. Before the war it ran well below capacity; utilization has surged as tankers load at Fujairah instead of Hormuz-dependent terminals .

• Iraq (Ceyhan): Iraq rerouted a portion of its crude exports via the pipeline to Turkey's Ceyhan Port on the Mediterranean, though volumes have been limited by infrastructure constraints and regional security .

Goldman notes that Saudi Arabia's East-West Pipeline has a theoretical capacity of 7 million bpd, but effective export capacity after domestic refinery demand is closer to 4.5–5 million bpd . The UAE's ADCOP pipeline has approximately 1.5 million bpd of capacity . Together with Iraq's Ceyhan route, total alternative pipeline export capacity stands at roughly 7.5 million bpd, a figure that is now structurally embedded in global supply chains.

Timeline: Faster recovery than expected

Goldman's base case assumes:

• Persian Gulf exports normalize to pre-war levels by the end of July — a significant pull-forward from the bank's earlier late-August estimate . This faster timeline reflects the immediate ceasefire and the expectation that the U.S. blockade will be lifted within days of the formal signing .

• Gulf production recovery by before October — Goldman expects the roughly 14.5 million bpd of Gulf output that was offline (57% of pre-war levels) to return within months under a safe reopening scenario, though the final stretch of recovery will be slower and more uncertain . External forecasts cited by Goldman suggest Gulf producers could recover about 70% of lost output within three months and approximately 88% within six months if the waterway reopens safely .

Revised Brent crude forecasts

Goldman cut its oil price forecasts sharply following the deal :

Forecast	Previous	New	Change
Brent Q4 2026	$90/bbl	$80/bbl	-$10
Brent 2027 average	$80/bbl	$75/bbl	-$5
WTI Q4 2026	$83/bbl	$75/bbl	-$8
WTI 2027 average	$75/bbl	$70/bbl	-$5

Goldman notes the new $80 Q4 2026 Brent target is roughly in line with current market pricing (~$82.80 as of June 16), suggesting markets have already mostly discounted the peace deal . The 2027 forecast of $75 points to a sustained oversupply dynamic once inventories begin rebuilding . The bank forecasts a global supply surplus of 3.2 million barrels per day in 2027 .

Upside and downside price scenarios

• Upside ($130+/bbl): If the Strait never fully reopens — due to a collapse in talks, renewed hostilities, or Iran's refusal to allow unrestricted transit — Goldman has previously flagged that oil could surge well above $130/bbl. Earlier in the crisis, the bank warned prices could surpass $100/bbl within a week absent a resolution . The $130+ figure represents a severe tail scenario where a permanent chokepoint closure removes 15+ million bpd from the market indefinitely.

• Downside ($60/bbl in 2027): Under a faster-than-expected normalization — where Gulf production recovers even sooner, Iran's sanction-free oil floods the market, and alternative pipeline flows remain elevated — Goldman's 2027 average could fall to $60 or below. The bank's pre-war 2026 baseline forecast was $56 for Brent, so a return toward those levels is within the downside range .

Diplomatic context: The US-Iran deal

• Preliminary deal announced June 14–15, 2026: President Trump and Iranian officials announced a preliminary accord to end hostilities and reopen the Strait . The framework was electronically signed by Trump and Vice President Vance on June 15 .

• Formal signing in Switzerland: The final agreement is scheduled to be formally signed in Geneva, Switzerland, with both parties and mediators present .

• Core terms: The interim deal includes a 60-day cessation of hostilities, Iran agreeing to reduce its stockpile of highly enriched uranium, and the U.S. lifting sanctions to allow Iran to sell oil freely — a major U.S. concession . The 60-day window is meant to allow negotiations on the fate of Iran's nuclear program .

• Iran's stated positions: Iran has indicated it intends to charge transit fees for ships passing through the Strait of Hormuz, viewing this as a revenue source and a way to monetize its geographic control. Tehran has also stated it will refuse to return to pre-war conditions, insisting on a new framework for Strait governance that includes compensation and formalized Iranian oversight.

Remaining uncertainties from the 60-day negotiation window

Several major risks remain unresolved :

1. Nuclear talks could collapse — Iran's nuclear program and the scope of sanctions relief are the hardest issues. If talks break down within the 60-day window, hostilities could resume .
2. Israeli offensive in Lebanon — An ongoing Israeli campaign in Lebanon could widen into a broader regional conflict and derail the U.S.-Iran arrangement entirely .
3. Enforcement and verification — There is no agreed mechanism to verify Iran's uranium reduction or to enforce transit guarantees through the Strait .
4. Iran's transit fee demands — If Iran unilaterally imposes fees or restricts passage for certain vessels, the "reopening" would be partial and could still disrupt ~30% of flows, consistent with Goldman's 70% permanent recovery thesis .
5. Pipeline vulnerabilities — The alternative routes (Yanbu, Fujairah, Ceyhan) are now critical infrastructure targets. Any new strikes on these facilities would eliminate the bypass capacity that underpins Goldman's normalization timeline.