The bank’s base case assumes a Strait of Hormuz agreement, easing energy prices and supporting Fed rate hold expectations.
Goldman Sachs maintains a bullish outlook on equities, forecasting oil prices to drop below 70 USD per barrel by year-end. The projection hinges on a potential deal easing tensions in the Strait of Hormuz, which would reduce energy costs and inflationary pressures.
The bank’s view contrasts with recent geopolitical escalations, including a reported Iranian missile strike on a tanker in the region. Prior expectations had centered on stable or rising oil prices amid ongoing conflicts, with consensus forecasts closer to 80 USD.
If the deal materializes, Goldman expects the Federal Reserve to maintain current rates, supporting front-end yields and equities. However, prolonged standoffs could reverse this outlook, driving energy prices higher and inflation persistence.