Oil rose to $110. Goldman Sachs warned: it may be expensive throughout 2027

Brent crude oil on March 20 returned to growth after two short-term intraday series of declines and is seeking a fifth consecutive week of growth, MarketWatch writes. At the time of publication, Brent is trading at $110 per barrel. At the intraday high, its price jumped to $111.22, showing an increase of more than 1% from the previous close. At the low on March 20, Brent cost $105.

Such dynamics of oil prices demonstrate against the background of contradictory signals from the Middle East region. On the one hand, Israel promised not to strike Iran's energy infrastructure for the time being. On the other hand, Axios, citing four sources familiar with the situation, reported that U.S. President Donald Trump is considering a forceful seizure of Iran' s Kharq Island (Iran's main export hub) to force Tehran to open the Strait of Hormuz.

According to Axios' interlocutors, the Trump administration is considering plans to de-block the Strait of Hormuz by occupying or blockading Iran's Kharq Island. The island is home to Iran's largest oil terminal, through which about 90% of the country's total oil exports come. This would be an extremely risky move that could put U.S. military personnel in direct jeopardy, Axios notes.

Such reports emerged on Friday, March 20, after Israel said it would refrain from strikes on Iran's gas fields after a request to that effect from Trump, and Britain, France, Germany, Italy, the Netherlands and Japan expressed "willingness to contribute to appropriate efforts to ensure the safe passage of ships through the Strait of Hormuz," through which some 25 percent of the world's offshore oil supply and a significant amount of LNG passes. "I also believe that this war will end much sooner than many people think," the United Kingdom, France, Germany, Italy, the Netherlands and Japan said at the press conference

Oil prices continued to show high volatility on March 20 amid these contradictory signals: Brent prices, after jumping to $111 per barrel in the middle of the day, fell to $106.9, and then - again returned to the daily highs at around $110 per barrel. April contracts for West Texas Intermediate (WTI) crude oil, after rising 0.9% to $97 per barrel, fell to $95.16 before rebounding to $98 per barrel. Both indices remain below the weekly highs they reached the previous day amid Israeli strikes on Iran's largest gas field South Pars and Iran's shelling of the Qatari LNG plant in Ras Laffan, as well as refineries in Qatar and on the Red Sea coast in the UAE. At the time, Brent topped $119 per barrel and WTI futures firmed above $100.

- "The likelihood of a rapid decline in energy prices is unlikely as production has already been damaged," said Ole Hansen, head of commodity strategy at Saxo Bank. "The actual situation is that the market remains tight," he added(quoted by Reuters).

- "The longer energy prices remain high, the more the market tends to build into expectations tail risks (extreme negative scenarios) and regulatory mistakes, in which an interest rate hike would be back on the agenda," said Barclays analyst Emmanuel Kau (quoted in MarketWatch).

- Goldman Sachs' baseline scenario assumes oil production normalizes within four weeks of the full opening of shipping through the Strait of Hormuz, but risks to oil prices remain skewed to the upside both in the short term and into 2027, analysts say. The persistence of a number of large supply shocks in the past highlights the possibility that oil prices could permanently consolidate above the $100 a barrel mark, Goldman warned, noting that if disruption risks persist, Brent could surpass its historic 2008 peak (around $147), Reuters wrote.

This article was AI-translated and verified by a human editor