Inside Goldman Sachs' Hormuz Warning: A 19 Million BPD Supply Shock and the Path to Demand Destruction

This physical shortfall has upended the global market balance. What was a 1.8 million bpd surplus in 2025 has swung to a 9.6 million bpd deficit in Q2 2026 . Soaring refined product prices are already causing demand to fall by about 1.7 million bpd in Q2 and an estimated 100,000 bpd for the full year . Goldman analysts warn that “even sharper demand losses could be required if the supply shock persists longer” .

Record Inventory Destruction

The drawdown of global oil stockpiles is happening at a pace never recorded before. In April 2026, inventories were falling at a rate of 11–12 million bpd . By May, with Hormuz flows at just 5% of normal levels, the rate remained historically extreme at 8.7 million bpd—nearly double the average pace since the conflict began . These rapid draws are depleting global reserves and setting the stage for severe fuel scarcity if shipping flows do not return to normal .

Goldman Sachs’ Evolving Brent Crude Price Scenarios

Goldman Sachs has progressively lifted its price outlook as the crisis has deepened. The bank’s forecasts lay out multiple timelines and their corresponding price implications:

• Early Scenario (June 2025): If oil flows were halved for one month and remained down 10% for the next eleven months, Brent could briefly peak at $110 per barrel before averaging $95 in Q4 2025 .
• Base Case (March 2026): The bank raised its Q2 average Brent forecast by $10 to $76/barrel and its full-year 2026 estimate to $71/barrel, modeling a six-week 5% flow disruption that would cause roughly 800 million barrels of cumulative losses .
• Prolonged Disruption (March 2026): If the closure drags on for several more weeks with flows at about 15% of normal, Brent could hit $100/barrel .
• Updated Q4 Forecast (April 2026): Citing 14.5 million bpd of production losses and record inventory draws, Goldman hiked its Q4 Brent call to $90/barrel and WTI to $83/barrel .
• Current Spot Prices (May 2026): Brent crude was trading near $106/barrel, up over 70% year-to-date, as Hormuz flows sat at just 5% of normal .

Daan Struyven, co-head of Global Commodities Research at Goldman Sachs, has noted that the market is now pricing a significant risk premium—roughly $14 per barrel—to compensate for the possibility of a full four-week halt in Hormuz flows .

Joint Institutional Alarm on Fuel Security

The gravity of the situation prompted a rare coordinated warning from the heads of the International Monetary Fund (IMF), the World Bank, and the International Energy Agency (IEA) on May 29–30, 2026 . In a joint statement following high-level meetings on the conflict, the three institutions warned that continued disruption to oil shipping through the Strait of Hormuz poses serious risks to fuel security, market stability, and broader economic resilience, particularly as the Northern Hemisphere enters peak summer demand months .

“Global oil inventories are being drawn down at a record pace in response to the major loss of supply through the Strait of Hormuz,” the leaders stated. “If shipping flows do not return to normal, continued rapid depletion of global oil inventories ahead of peak summer oil demand would present increasing risks to fuel security.”

The warning specifically highlighted the vulnerability of developing and emerging markets to potential physical fuel shortages and import cost spikes .

How Different Regions Absorb the Shock

The crisis is not hitting all economies equally. Here is how the supply shock is cascading across major regions:

• Asia: Import-dependent economies like India, Japan, South Korea, and China are the most exposed, facing soaring import costs, widening trade deficits, and the risk of fuel rationing.
• Europe: Higher energy costs compound existing inflationary pressures, slowing economic recovery and adding to natural gas price risks.
• United States: Domestic shale production provides relative insulation, but consumers still face higher gasoline prices and broader inflation. Goldman’s later WTI forecasts are in the $83–$87 range .
• Middle East Producers: While some Gulf states benefit from elevated prices, nations dependent on Hormuz exports—including Saudi Arabia, the UAE, Iraq, and Kuwait—are directly harmed by their inability to ship crude.
• Emerging Markets: Bear the heaviest burden due to high fuel import dependency and limited fiscal buffers to absorb price spikes. The IMF, IEA, and World Bank explicitly flagged risks to economic resilience in these regions .

For now, the global oil market remains in uncharted territory, with Goldman Sachs signaling that a fundamental rebalancing will require either a complete return of supply or significant additional demand destruction—a reality already reflected in near-$106 Brent prices and record inventory depletions.