Goldman says fuel prices hit harder than crude in oil shock

Wednesday 18 March 2026 - 07:20

By: Dakir Madiha

Goldman says fuel prices hit harder than crude in oil shock

Goldman Sachs warned that the ongoing conflict involving the United States, Israel and Iran is driving sharper increases in refined fuel prices than in crude oil, even as Brent remains above 100 dollars per barrel amid one of the largest supply disruptions on record.

The bank’s commodities team, led by Daan Struyven, raised its short-term outlook for Brent, projecting an average of 98 dollars per barrel for March and April. This level is about 40 percent higher than 2025 prices. Goldman expects prices to ease to 71 dollars by the fourth quarter, though this forecast is still above its earlier estimate of 66 dollars, which had already been revised upward days earlier.

The bank now assumes a more severe disruption in the Strait of Hormuz, modeling 21 days of sharply reduced flows operating at just 10 percent of normal capacity, followed by a gradual recovery over 30 days. Its previous scenario had assumed only 10 days of disruption. In a more adverse case involving a two month shutdown, Goldman projects Brent at 93 dollars in the fourth quarter and warns that daily prices could approach the 2008 peak near 150 dollars if supply remains constrained through March.

Goldman analysts said refined fuels are bearing the brunt of the shock. Prices for products such as jet fuel, diesel and fuel oil have risen faster than crude because of limited alternative supply. Around 60 percent of crude exports from the Persian Gulf consist of medium and heavy grades typically used to produce these fuels, making substitution difficult.

Jet fuel prices have surged from about 85 to 90 dollars per barrel before the conflict began on February 28 to between 150 and 200 dollars. In parts of Asia, fuel costs have nearly doubled, prompting South Korea to join China and Thailand in restricting exports to secure domestic supply. Airlines including Cathay Pacific, Qantas and Air New Zealand have raised fares or withdrawn financial guidance in response to rising costs.

The broader economic impact is also building. Goldman estimates that a sustained 10 percent increase in oil prices adds around 0.2 percentage points to core inflation measured by personal consumption expenditures and reduces GDP growth by about 0.1 percentage points. Under its bullish oil scenario, the bank expects PCE inflation to peak at 4.5 percent in the spring before easing to 3.3 percent by year end. It now anticipates only limited interest rate cuts by the Federal Reserve, arguing that the oil shock complicates the case for a June reduction.

Barclays said Brent could reach 120 dollars if the conflict persists for several more weeks. Meanwhile, the United States plans to release 172 million barrels from strategic reserves as part of a coordinated international effort to stabilize supply concerns.