Oil Hits $100+/Barrel Risk Point if Strait of Hormuz Shuts: Goldman Sachs Warns

In a striking new analysis, Goldman Sachs has issued a critical warning to global energy markets: the price of crude oil could skyrocket past $100 per barrel if the Strait of Hormuz—a vital maritime chokepoint—is closed due to escalating geopolitical tensions in the Middle East.

This projection, while hypothetical, has sent ripples through global markets, raising concerns not just among traders and energy companies, but also among policy makers, businesses, and consumers already feeling the weight of inflationary pressures in 2025.

Why the Strait of Hormuz Matters

The Strait of Hormuz, located between Oman and Iran, is one of the most important shipping routes in the world. It connects the Persian Gulf with the Arabian Sea, serving as the primary passage for oil and gas exports from Saudi Arabia, Iran, Iraq, the UAE, and Kuwait.

According to the U.S. Energy Information Administration, nearly 21 million barrels of oil per day—representing about 21% of global petroleum liquids consumption—pass through this narrow corridor.

If the Strait were to be blocked or compromised due to conflict, sabotage, or sanctions, the disruption to global oil supply would be immediate and severe.

Goldman Sachs’ Analysis: Price Impact

In a detailed report released this week, Goldman Sachs energy strategists warned:

«A complete or partial closure of the Strait of Hormuz could remove up to 15–20 million barrels per day from the global supply chain. The resulting price shock could lift Brent crude above $100, potentially reaching $120+ if the disruption lasts more than a few weeks.»

This analysis assumes a worst-case scenario, but markets have already begun pricing in a risk premium. As of today, Brent crude has risen to $93.80/barrel, while West Texas Intermediate (WTI) climbed to $91.50.

What’s Fueling the Tension?

The warning comes amid rising military activity and political instability in the region:

Increased U.S.-Iran tensions over nuclear development and drone strikes
Naval exercises by Iranian Revolutionary Guards near the Strait
Attacks on oil tankers in adjacent waters, raising fears of sabotage
Regional power struggles involving Saudi Arabia, Israel, and proxy militias

While no closure has yet occurred, energy analysts and intelligence agencies remain on high alert. Even a temporary disruption—such as the seizure of a tanker or a drone attack—could spike prices in the short term.

Market Reactions and Investor Behavior

Markets are already responding to the risk narrative:

Energy stocks like ExxonMobil, Chevron, and Halliburton have seen strong gains
Oil futures are seeing heavy volume as traders hedge against upward moves
Safe haven assets like gold and U.S. Treasury bonds are also trending upward

For investors, the playbook is clear: energy is the new hedge. Portfolio managers are increasing exposure to oil-linked assets, refining companies, and even uranium and alternative energy plays, anticipating both short-term gains and long-term supply volatility.

Impact on Consumers and Inflation

If oil breaches the $100 mark, the knock-on effects could be swift and painful:

Gasoline prices in the U.S. could exceed $6 per gallon in some states
Airfare and shipping costs would rise, affecting global supply chains
Food prices could spike due to increased transportation and fertilizer costs
Inflation—already hovering around 4.3% in the U.S.—could rebound even higher

Central banks, particularly the Federal Reserve, will have to weigh these inflationary pressures against stagnant growth, risking a renewed debate over stagflation.

“This is not just an oil story—it’s an everything story,” said Fiona Ellis, chief economist at GlobalMacro Advisors. “Energy touches every aspect of the economy.”

Political and Strategic Implications

If the risk of closure escalates, it could draw in global military forces. The U.S. Fifth Fleet, based in Bahrain, has already increased its patrols. NATO allies have begun reassessing naval deployments in the Gulf.

In a statement, the U.S. Department of Defense said it is “committed to ensuring the uninterrupted flow of energy resources and maintaining freedom of navigation in international waters.”

Meanwhile, China, the largest importer of Middle Eastern oil, has urged for “peaceful resolution” while quietly building up its strategic petroleum reserves (SPR) in anticipation of a price shock.

How Can Countries Prepare?

Goldman Sachs recommends several contingency strategies for nations and businesses:

Diversify oil supply sources (e.g., from Africa, the U.S., Brazil)
Accelerate green energy investment to reduce oil dependency
Expand strategic reserves to buffer short-term disruptions
Strengthen diplomatic channels to de-escalate regional tensions

The International Energy Agency (IEA) has indicated it may release additional barrels from its emergency reserves if prices continue to rise.

Conclusion: A Time for Caution and Readiness

While the Strait of Hormuz remains open as of this writing, the risk of closure—however small—is not to be ignored. The consequences of even a temporary disruption could be significant for oil markets, consumers, and the global economy at large.

With Goldman Sachs ringing the alarm bell and oil prices creeping steadily upward, both governments and investors must stay vigilant. As history has shown, the Strait of Hormuz is more than just a waterway—it’s a geopolitical pressure point with the power to rattle the entire world economy.