Goldman Sachs: Hormuz Oil Flows May Recover to Only 70% Post-War

Goldman Sachs Group Inc. announced on June 18, 2026, that oil flows transiting the Strait of Hormuz may recover to only about 70% of their pre-war volume following a regional conflict. The investment bank highlighted a structural shift as regional producers increasingly rely on alternative pipeline routes to bypass the maritime chokepoint. Goldman Sachs stock traded at $1,099.14, up 2.13% on the day. The firm's shares reached an intraday high of $1,121.74, reflecting market engagement with its analysis as of 04:35 UTC today.

Context — why this matters now

The Strait of Hormuz is the world's most critical oil transit chokepoint, with pre-war flows averaging 21 million barrels per day, or about 21% of global petroleum consumption. The last major disruption occurred in 2019, when attacks on tankers temporarily halted 30% of flows, causing a 5% spike in Brent crude prices over a single week. The current macro backdrop features Brent crude trading near $85 per barrel, with the ICE Brent Futures curve in moderate backwardation, indicating tight near-term supply concerns.

The immediate trigger for Goldman's reassessment is the observed acceleration of investment in pipeline infrastructure by key Gulf producers. Saudi Arabia has reportedly expedited capacity increases on its East-West Pipeline, which can redirect up to 5 million barrels per day away from the Strait. The United Arab Emirates is likewise maximizing use of the Habshan-Fujairah pipeline, creating a durable alternative to shipping from the Persian Gulf. This strategic pivot mitigates risk but implies a permanent reduction in the Strait's centrality to global oil logistics.

Data — what the numbers show

Goldman's forecast implies a permanent loss of approximately 6.3 million barrels per day of transit volume through the Strait of Hormuz, based on a pre-war baseline of 21 million barrels per day. The ICE Brent crude futures contract for front-month delivery was quoted at $84.92 per barrel. The United States Oil Fund (USO), an ETF tracking oil futures, saw a 1.8% increase in trading volume compared to its 30-day average.

A comparison of key oil chokepoints underscores Hormuz's dominance. The Strait of Malacca handles roughly 16 million barrels per day, while the Suez Canal transits approximately 5.5 million barrels per day. The projected 70% recovery rate for Hormuz flows is significantly lower than the 95% recovery pace witnessed after the 2019 disruptions, indicating a more profound and lasting impact on trade patterns. The price of Very Large Crude Carrier (VLCC) freight rates from the Gulf to Asia has increased by 35% month-over-month, reflecting higher risk premiums and longer voyage distances for rerouted crude.

Analysis — what it means for markets / sectors / tickers

European and Asian refinery margins are likely to see sustained pressure from higher delivered crude costs, particularly for complex refiners configured for specific Gulf crude grades. Tanker companies with significant VLCC and Suezmax fleets, such as Frontline (FRO) and Euronav (EURN), stand to benefit from increased ton-mile demand as voyages lengthen. Pipeline operators and storage providers at alternative terminals, like those in Fujairah, may experience a structural uplift in utilization rates and fees.

A key limitation to this analysis is the potential for a faster-than-expected normalization of regional security, which could allow flows to rebound more quickly. However, the capital-intensive nature of pipeline investments suggests the shift has long-term momentum. Trading flow data indicates institutional investors are building long positions in the Energy Select Sector SPDR Fund (XLE) while shorting airlines (JETS ETF) and other sectors sensitive to high crude prices. The net effect is a market pricing in a tighter, higher-cost oil market for the foreseeable future.

Outlook — what to watch next

Market participants should monitor the weekly U.S. Energy Information Administration inventory report on June 22 for signs of a drawdown in global stocks. The next OPEC+ meeting on July 1 will be critical for assessing the group's response to the altered supply landscape and any potential adjustments to production quotas. Technical analysts are watching the $87.50 resistance level for Brent crude; a sustained break above this point could signal a move toward the $90-$92 range.

Further escalation or de-escalation rhetoric from regional governments will be the primary driver of the risk premium embedded in oil prices. The commitment of capital expenditure toward new pipeline projects in the second half of 2026 will provide concrete evidence of the permanence of this supply chain realignment. For more analysis on energy market dynamics, see our coverage of global oil inventories.

Frequently Asked Questions

What does reduced Hormuz flow mean for gasoline prices?

A sustained reduction in Hormuz flows and the associated higher tanker rates typically translate to increased costs for refiners, which are often passed through to consumers. The impact is most acute in Asia and Europe, which are more dependent on Middle East crude. The U.S. market, with significant domestic production, may see a more muted direct effect, though global price benchmarks still influence local pump prices.

How does this compare to the oil price shock of 1973?

The 1973 oil embargo involved a coordinated political cutoff of supplies to specific nations, causing prices to quadruple. The current situation is a physical disruption and logistical recalibration, not a politically motivated embargo. While both events highlight the vulnerability of oil infrastructure, the existence of strategic petroleum reserves and more diversified global supply today provides a larger buffer against extreme price shocks.

Which countries are most affected by Strait of Hormuz disruptions?

Japan, South Korea, and India are the most exposed, as they rely heavily on Hormuz-transited crude for their energy needs. China, while also a major importer, has diversified its sources significantly through contracts with Russia and African producers. European nations like Italy and Spain have high import dependency but maintain a more varied import portfolio than Asian counterparts.

Bottom Line

Goldman Sachs projects a lasting 30% reduction in Hormuz oil flows, structurally tightening global supply chains.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.