[Goldman Sachs Report] Hormuz Strait Paralysis and the Era of $100 Oil: A Geopolitical Perfect Storm

[Goldman Sachs Report] Hormuz Strait Paralysis and the Era of $100 Oil: A Geopolitical Perfect Storm

Subtitle: Unprecedented 17 Million Barrel Supply Shock and the Warning of 'Demand Destruction'

Original Report Date: March 6, 2026

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3-Line Summary

• Historic Supply Shock: With oil traffic through the Strait of Hormuz plunging by 90%, 17 million barrels per day are currently trapped, representing an unprecedented scale that is 17 times larger than the shock of the 2022 Russian crisis.

• Neutralization of Detours and Prolonged Fears: Alternative pipeline routes via Yanbu and Fujairah ports have reached their limits due to facility attacks and fuel shortages, and the logistical crisis could be prolonged for over a month due to the physical risk of ship destruction.

• Worst-Case Scenario 'Demand Destruction': If the situation is not resolved quickly, global crude inventories will be depleted, and the market is highly likely to force prices to extreme levels—causing 'demand destruction' where consumers abandon purchases—potentially breaking the historic peaks of 2008 or 2022.

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In-Depth Report Analysis

In a report released last Friday, Goldman Sachs (GS) strongly warned that international oil prices were highly likely to break $100 per barrel in the short term due to logistical disruptions in the Strait of Hormuz, and prices have indeed surpassed $100 since then. GS analyzed that if the situation is not resolved quickly, prices could exceed the peaks seen in 2008 or 2022.

1. 17 Times the Russian Crisis: A Supply Shock of Unprecedented Scale

The first thing GS pointed out is the sheer "scale" of this supply shock. The amount of crude oil currently unable to exit the Persian Gulf is estimated at 17 million barrels per day. To put this into perspective, this figure is a staggering 17 times the volume of the Russian oil supply reduction that panicked the world immediately following the outbreak of the Russia-Ukraine war in April 2022.

Normally, about 20 million barrels of crude oil and petroleum products pass through the Strait of Hormuz daily, but currently, 90% of this volume is cut off, with only 10% passing through. Initially, GS assumed a base scenario where traffic would remain at 15% (projecting March Brent in the $80s and Q2 in the high $70s), but they diagnosed that the actual flow is far more severely blocked.

2. The Collapse of Pipeline Detours

As an alternative to the blocked Strait of Hormuz, one might consider using pipelines connecting to the port of Yanbu in Saudi Arabia or the port of Fujairah in the UAE. Theoretically, there should be capacity to detour up to 3.6 million barrels per day through these routes.

However, according to GS data, the additional crude oil transported via these detour routes over the past 4 days was only 900,000 barrels per day, evaluating it as falling drastically short. The reasons explained are recent physical strikes on the Fujairah port and oil storage facilities, coupled with local shortages of bunker fuel needed for tankers to operate. This means that even the detours are unsafe or have hit physical limits.

3. 'Physical Risk' Beyond Economic Logic

Currently, maritime freight rates to Asia have surged so much that, from a shipping company's perspective, successfully completing a voyage would be highly profitable even after paying exorbitant insurance premiums. Nevertheless, GS views the reason ships are hesitating and maintaining a "wait-and-see" approach as simple: the "physical risk" of a ship being destroyed is simply too high.

In fact, numerous ships have been hit recently near the Strait of Hormuz. Accordingly, by synthesizing forecasts from various sectors (the US government, refiners, insurance companies, etc.), GS predicts this logistics crisis will last anywhere from 10 days to over a month.

4. Inventory Depletion and the Time for 'Demand Destruction'

The most concerning aspect highlighted by GS is that oil prices could skyrocket to extreme levels of "demand destruction." "Demand destruction" is an economic phenomenon where the price of an asset becomes so expensive that consumers simply cannot afford to buy it, ultimately giving up consumption and forcing a reduction in demand.

GS diagnosed that due to the unprecedented supply disruption of 17 million barrels per day, global crude inventories are at risk of being depleted at a massive rate. They added that if anxious consumer nations and companies begin hoarding crude oil, inventory reduction will accelerate. Ultimately, GS's chilling analysis is that the market will have no choice but to push prices up to extreme levels—forcing people to give up using oil—in order to balance the depleting inventories.

5. Conclusion and Three Scenarios

GS emphasized that a reduction in physical risk is a prerequisite for the blocked logistics volume in the Strait of Hormuz to revive, presenting the following three settlement scenarios:

• A general de-escalation of armed conflict

• Strong US tanker protection operations

• A plan where Iran allows safe passage only for tankers of specific nations (e.g., China)

If these positive signals do not appear within a few days, GS forecast a very high probability that oil will break $100 next week. Furthermore, they strongly warned that if this situation continues throughout March, the prices of crude oil as well as refined petroleum products like gasoline are highly likely to break past their historic highs of 2008 or 2022.

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StockHub Insight & Comments

This Goldman Sachs report serves as a stark warning that a geopolitical supply shock can go beyond simple energy inflation and trigger an extreme 'demand destruction' that paralyzes the market. A supply blockade of 17 million barrels per day and the collapse of alternative detours leave open the worst-case scenario of breaking historic price peaks. Investors must strictly prepare for the possibility that this logistics crisis could be prolonged for over a month due to the physical risk of ship destruction, leading to a subsequent global depletion of crude oil inventories.