Goldman Sachs Warns of Global Diesel Supply Squeeze

Goldman Sachs warns of a significant diesel supply squeeze resulting from simultaneous geopolitical crises in the Strait of Hormuz, the Red Sea, and the Black Sea, combined with Russian restrictions on refinery exports. The firm reports that oil flows in the Persian Gulf have plummeted from 80 percent of normal levels back to approximately 40 percent following a recent re-escalation.

Price forecasts for Brent crude vary based on the stability of production. In a base case where production normalizes, the firm predicts an average of $80 per barrel in the fourth quarter of 2026. However, a worst-case scenario involving only gradual improvement could drive prices to $120 per barrel this quarter and an average of $100 per barrel next year.

Beyond energy, the firm expects gold prices to reach $4,900 by the end of the year due to central bank diversification. Conversely, Goldman Sachs maintains a bearish long-term outlook on iron ore, citing structural weakness in the construction sector of China. The Chinese government is currently attempting to mitigate oil disruptions through the use of strategic reserves and increased electric vehicle adoption.