Trump's Iran Ultimatum and Goldman's $110 Forecast Put Oil Markets on a Knife's Edge

Brent crude prices went up and down wildly in early Asian trade on Monday. They went as high as $114.35 a barrel and then went back down to $112.00. 

This happened after President Trump gave Iran a harsh 48-hour ultimatum: reopen the Strait of Hormuz or critical energy infrastructure will be destroyed. The wild swings in prices are exactly what Goldman Sachs meant when it raised its oil price prediction for the second time in less than two weeks on Sunday.

The company now thinks that Brent will average $110 a barrel through March and April, up from $98 before.

Goldman's study shows that market volatility isn't a bad thing. This is what it is, and it won't go away any time soon.

Trump's Ultimatum: What It Changes and What It Doesn't

As of today, the 48-hour limit, there is already a conflict going on that has been going on for four weeks. The Strait of Hormuz has been blocked since the U.S. declared war on Iran in late February. Iran's reaction was quick and defiant: it shut down the Strait completely and threatened to attack energy and water infrastructure in Gulf countries that were close by. It was said that Iran launched new attacks on Israel early Monday morning.

The goal is the step up. But the real problem with the supply—about 20% of the world's oil consumption normally going through the Strait—has been the market's fact since the first week. Early in March, the price of a barrel of oil had already reached almost $120. The supply problem wasn't caused by Trump's threat, but it did make it more likely that things will get much worse before they get better.

To make things even more confusing, Trump was said to have been thinking about "winding down" the war the day before he issued the ultimatum, even though the US kept sending more troops and naval assets to the area. The markets are now pricing in a leadership position that can change in an instant. This is why Goldman is adding a "growing risk premium" to its models.

Goldman's Upgraded Roadmap: $110 Near-Term, $2008-Record Risk Further Out

Goldman's new plan, which was led by oil market researcher Daan Struyven, thinks that Hormuz flows will stay at only 5% of normal levels for six weeks, and then slowly get back to normal for one month. That base case, not the worst case, is now what the $110 March-April Brent estimate is based on.

The change will have effects far beyond the current problem. Goldman raised its full-year 2026 Brent expectation from $77 to $85, with WTI expected to be $79, due to a drop in commercial inventories and a change in the structure of the price of effective spare capacity. The last change, on March 11, raised Q4 2026 Brent from $66 to $71. This is the second increase in two weeks.

The bank thinks that Brent will average $80 in 2027, but it warns that daily Brent prices could go above their 2008 high if very bad things happen and Hormuz stays blocked for a long time. As Struyven put it, the structural change will likely lead to higher strategic stockpiling and longer-term prices once the risks from the high concentration of production and spare capacity are understood.

The trade situation is very uncertain now. If Iran gives in oil traffic through the Strait of Hormuz starts up again then the price of Brent oil could drop sharply to around $95 to $100.

If nothing happens within 48 hours then the price might go up. In that case $110 could be a price for Brent oil and it could even reach $115 by the end of 2026.

Some energy companies are in a position. Those that produce oil outside the Middle East and refineries that do not use oil from the Gulf are likely to do well.

For traders the important thing to watch is how this conflict changes the way people think about the risk of relying on oil supplies. This could affect oil prices for a time not just a few weeks.

Energy equities with -Middle Eastern production exposure and refiners insulated from Gulf crude feedstocks remain structurally advantaged.

For traders the point, about long-dated price repricing is the more durable signal. This conflict is changing how the market values supply concentration risk for years, not weeks.