Goldman Sachs Cuts Q2 Oil Price Estimates Amid US-Iran Ceasefire, Maintains Longer-Term Outlook

Goldman Sachs dialed down its oil price forecasts for the second quarter after a US-Iran ceasefire deal allowed for reopening of the Strait of Hormuz. The ceasefire prompted a retreat in benchmark Brent and WTI crude futures toward the mid-$90 range, easing the immediate supply concerns.

The bank now projects Brent crude price to average $90 per barrel in Q2, down from its earlier $99 call, while WTI is adjusted to $87 from $91. This revision comes as oil flow resumes through one of the world's most strategic chokepoints, with expectations that Persian Gulf exports will normalize over the next month.

Despite trimming near-term price forecasts, Goldman held firm on its medium-term outlook. It maintained Q3 and Q4 Brent prices at $82 and $80 a barrel, and WTI at $77 and $75, signaling their confidence that the market balances out later in the year.

However, the strategists flagged the ceasefire as tentative - Vice President Vance himself called it "fragile." They caution that oil prices still face upside potential if unrest prolongs or if crude production losses persist, which could tighten supply yet again.

Goldman painted a scenario where failure of the ceasefire and a delayed reopening of the Strait by a month could propel Brent crude above $100 per barrel in Q4. A more severe case with sustained production losses around 2 million barrels a day could push prices even higher to $115.

In related energy markets, European natural gas benchmark TTF dropped sharply to 45 EUR/MWh after the peace deal. Goldman cut its Q2 TTF forecast to 50 EUR/MWh from 70 due to weaker-than-expected Chinese LNG demand and robust European LNG imports, which reduced short-term price pressure.

The bank kept its second-half TTF estimate around 42 EUR/MWh, slightly below current futures. Still, it highlighted a risk of gas prices rallying above 75 EUR/MWh if LNG shipments through the Strait encounter fresh disruptions or infrastructure damage, potentially forcing Europe into more drastic demand cuts.

While the ceasefire has eased immediate fears, the energy market remains on edge, dependent on how lasting this diplomatic development becomes and the speed at which the Persian Gulf's oil infrastructure stabilizes.